Are you wondering, “Am I a dependent or independent on taxes?” This is an important question to ask because you can pay taxes to the IRS as a dependent or independent taxpayer. But it is important that you know when you can assume each status and the implications of doing so to avoid future problems.
What Are Dependent Taxpayers?
According to the IRS, a dependent is any qualifying child or relative who partly or fully relies on another person for care and expenses. And when a taxpayer claims that person on their taxes, they may become eligible for relevant tax credits for dependents. However, one cannot claim their spouse as a dependent. Neither can they claim themselves.
Read More: Claiming Dependents for Your Taxes
Do You Qualify as a Child?
A qualifying child is any child under 19 by the end of the year and younger than the parent or guardian. A child can also be under 24 at the end of the year, provided they are a full-time student for five months or more. Also, a qualifying child may be an adult of any age so long as they are permanently and completely disabled at any time during the year.
It is worth noting that the IRS has a different definition of a child. If you are related to your parent or guardian as a step, biological, adopted or foster child, you can be claimed as a dependent. You can also be claimed as a dependent by your full, half and step-sibling. In addition, your aunt and uncle, as well as your grandparents, can claim you as a dependent on their taxes.
To be claimed as a dependent, you must live with your parent or guardian for at least six months of the year. However, some exceptions apply. For example, if you went to boarding school or were away from home due to military service, the IRS will still count that as time you spent at home.
Even if you are married and can file a joint return, your parents or guardian may still claim you as a dependent if you only file a return to get a tax refund from taxes withheld from your paycheck.
You can file taxes as a qualifying child if you exceed a specified amount of income in a year. However, you cannot provide more than half of your own support during that year.
Do You Qualify as a Relative?
Even if you don’t qualify as a child, you may qualify as a relative and still get claimed as a dependent. Usually, that happens when you don’t meet the criteria for a qualifying child but:
- Are related to the taxpayer according to the relationships described above or live in the household of the taxpayer for at least six months.
- The taxpayer claiming you pays for at least half of your living expenses.
- Your gross income is less than $4,300.
Filing Taxes as An Independent for The First Time
When can a college student file as independent for taxes? You can file taxes as an independent for the first time if you have not been claimed on another taxpayer’s taxes as a dependent.
Also, when you become older than 19 or 24 years while in college, get married or have your own child, it is wise to file independent taxes.
Whereas a qualifying child can earn more than $4,300 and still be a dependent, a qualifying relative cannot exceed that threshold and maintain their dependency status. So, at that point, you have no choice but to file your own taxes even if you partly depend on someone else for upkeep.
That said, a qualifying child will have to file taxes when they exceed the $12,550 standard deduction in 2021 as earned income. But for blind dependents, the threshold increases to $14,250. For unearned income, the limits are $1,100 or $2,800 if the child is blind.
You cannot claim yourself as a dependent on your own taxes. But you can claim someone else who meets the qualifying child or relative criteria. In addition, if you want a tax refund, you must file a tax return, even if you don’t owe taxes.
Read More: Child Tax Credit: What Is It & How to Qualify
Pros and Cons of Filing Independent vs. Dependent
The biggest advantage of filing taxes as an independent is that you get to claim dependents on your taxes. When you do so, you can reduce your tax liability significantly and even get some of the taxes refunded. Also, you can claim the maximum credits available to you based on the number of dependents you claim.
That said, filing taxes as an independent taxpayer means you are subjected to the regular tax rates.
On the other hand, as a dependent, you cannot claim anyone else on your taxes as a dependent, not even yourself. That means you may lose out on the tax benefits from dependent credits. And even when you get access to some tax benefits, your benefits may be limited compared to those with qualifying children or relatives.
Your parent or guardian can make work easier on you by filing taxes on your behalf. That could happen if your dividend and interest income are less than $11,000 and you have no other sources of income. However, if you have additional unearned income whose total exceeds $2,200 on a given year, you may have to file your own tax returns via Form 8615.
- IRS.Gov: Qualifying Child Rules
- IRS.Gov: Dependents
- IRS.Gov: Publication 501 (2021), Dependents, Standard Deduction, and Filing Information
- College Raptor: From Dependent to Independent: Filing Taxes for the First Time
- IRS.Gov: Publication 929 (2021), Tax Rules for Children and Dependents
- IRS.Gov: Topic No. 553 Tax on a Child's Investment and Other Unearned Income (Kiddie Tax)
- IRS: Overview of the Rules for Claiming a Dependent
I hold a BS in Computer Science and have been a freelance writer since 2011. When I am not writing, I enjoy reading, watching cooking and lifestyle shows, and fantasizing about world travels.