When most people think of dependents for tax purposes, they think of claiming their spouse and kids. However, if you limit your thinking to just those two groups, you could be missing out on extra tax breaks if you take care of a sibling. The Internal Revenue Service has two sets of criteria for how to claim someone as your dependent on taxes: qualifying children and qualifying relatives. No matter which set of tests you try to meet, you can’t claim someone if you could be claimed as someone else’s dependent or, if you’re filing a joint return, your spouse could be claimed. Also, your sibling must be an American citizen, resident alien, or national, or a resident of Canada or Mexico.
You can claim your sibling on your taxes if you meet the requirements set by the IRS.
Requirements for Qualifying Child Exemption
Contrary to the phrase “qualifying child,” your sibling, including half-siblings and step siblings, could qualify if the sibling meets the remaining criteria. Your sibling must be younger than you and under 19 years old at the end of the year or, if your sibling is still a full-time student, the age limit goes up to under 24 years old. If your sibling is permanently and totally disabled, there’s no age limit.
Your sibling must live with you for at least half of the year to meet the qualifying child tests. In addition, your sibling can’t provide more than half of his or her own support during the year. That means that he or she can’t pay for more than half of his or her living costs like rent, food, medical care and education. Finally, your sibling can’t be filing a joint return unless it’s only to claim a refund of their tax withholding or estimated taxes paid.
Requirements for Qualifying Relative Exemption
If your sibling doesn’t meet the requirements to be your qualifying child, all is not lost – your sibling might still meet the requirements to be claimed as a qualifying relative. However, if someone else could claim your sibling under the qualifying child tests, you’re not allowed to claim him or her as your qualifying relative. Second, your sibling’s gross income, before any deductions, must be less than the value of an exemption, which is $4,050 for the 2017 tax year. Third, you must provide more than half of the support for your sibling during the year.
The IRS also requires that someone you want to claim as a dependent under the qualifying relative criteria live with you for the entire year or be related to you. Siblings are covered under the relationship test, so your sibling doesn’t have to live with you the entire year to qualify.
Tax Savings for Claiming Dependents
If you qualify to claim your sibling as your dependent on your taxes, you can reduce your taxes in the 2017 tax year. Each exemption you claim reduces your taxable income by $4,050 in the 2017 tax year, though that amount could be phased out if you make too much money. In 2017, the exemption deduction starts decreasing when your adjusted gross income exceeds $156,900 if you’re married filing separately, $261,500 if you’re single, $287,650 if you’re a head of household, or $313,800 if you’re married filing jointly or a qualifying widow or widower. If your adjusted gross income exceeds those limits, the value of your exemption decreases by 2 percent for every $2,500 or part of $2,500 that you’re over the limit.
Exemptions in 2018
Starting with the 2018 tax year and continuing through the 2025 tax year, the tax break for each exemption you claim on your tax return is reduced to zero. As a result, even if you qualify to claim your sibling as your dependent, you won’t gain any tax benefit. Unless the tax law changes, exemptions for dependents will return starting in the 2026 tax year.
Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."