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Tax Dependent Rules
A tax dependent is a person, other than the tax filer or the tax filer's spouse whom the tax filer claims as a dependent. It is possible for some individuals to claim tax dependents that do not reside in the home (they may even be outside the country) - all tax dependents must be included in determining the MAGI MC household composition. The tax dependent's household size is the same as the tax filer's household size except in the following situations when the non-tax filer rules apply:
Three (3) Tax Dependent Exceptions
- A tax dependent who is not a child (biological, adopted, or step) or spouse of the tax filer (i.e. generally, tax filer household size will include the dependent. The dependent will have a household size determined by non-filer rules.)
- A child living with both parents who do not expect to file a joint tax return (i.e. unmarried parents file separately, both parents are included in the child's household).
- A child claimed as a tax dependent of a non-custodial parent (i.e. the child lives with mom but is claimed by dad who lives outside the home).
Example:
Mom lives with a child who is claimed as a tax dependent by the non-custodial parent (dad). The MAGI household sizes would be:
- CASE 1:
- Mom's household is 1. (Mom)
- Child's household is 2. (Child and mom)
- CASE 2:
- Dad's household is 2. (Dad and child)
Note: The parent who claims the child on his/her tax return is responsible for the child's health insurance. If the child does not meet Minimum Essential Coverage (MEC) for the tax year, that parent will receive a tax penalty.
In the example above, if the child does not meet MEC, the dad will receive the tax penalty for the child.
Tax Dependents
| Health Insurance Coverage Dependent | Qualifying Child or Relative for IRS Tax Filing Purposes | MAGI MC Household | |
| Definition of Child | Biological or adopted child | Qualifying children include biological, step, adopted or foster children, siblings, nieces or nephews, or grandchildren. | Biological, step, or adopted child |
| Age Limit | Children must be under 26 to be eligible for dependent coverage. |
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Dependents for Health Insurance Coverage Purposes
A coverage dependent is a child (biological or adopted) who is under age 26 and can continue receiving health insurance coverage on the parent's employer-sponsored health plan.
Who Qualifies as a Coverage Dependent?
- Example 1: Pietro is 24 years old, lives on his own, and earns $30,000.
- Question 1: Does he qualify as a coverage dependent?
- Answer 1: Yes, because he is under 26 years old.
- Example 2: Binh is 27 years old, lives with her parents and attends law school with no earnings.
- Question 2: Does she qualify as a coverage dependent?
- Answer 2: No, because she is over 26 years old.
- Example 3: Kaja is 5 years old under the guardianship of her aunt and lives with her.
- Question 3: Does she qualify as a coverage dependent?
- Answer 3: No, because she is not a biological or adopted child of her aunt.
Dependents for IRS Tax Filing Purposes
A tax dependent is a person, other than the tax filer or tax filer's spouse, for whom the tax filer can claim an exemption.
There are two kinds of tax dependents:
- Qualifying Child
- Qualifying Relative
Dependents for MAGI MC Household Purposes
The rule to apply for tax dependents claimed by their parents when determining who is in a tax filer's household may be effected by the age of the child.
Married Parents Filing Jointly
A tax dependent's age is not a factor when married parents file jointly and claim their children. The household rule for tax dependents always applies, which states that the household of a tax dependent is the household of the tax filer claiming the dependent.
A married couple with one common child (9 years old) files Married Filing Jointly, live together, and they claim their common child as a tax dependent. The MAGI MC households are as follows:
- Mom's household is 3. (Mom, dad, and child)
- Dad's household is 3. (Dad, mom, and child)
- Child's household is 3. (Child, mom, and dad)
Note: If the child's age was 30 years old instead of 9 years old, then she would be claimed as a qualifying relative instead of as a qualifying child. However, the MAGI MC household size for each individual (mom, dad, and child) would remain the same at three (3).
Married Parents Filing Separately
A tax dependent's age may be a factor when married parents file separately, live together, and claim their children. In this situation, the tax dependent's age affects which MAGI MC household rule is applied. The non-filer rules would be applied for these households.
Children at 19 years old or 21 years old (full-time student)
The household rule for tax dependents always applies, which states that the household of a tax dependent is the household of the tax filer claiming the dependent.
Children under 19 years old or 21 years old (full-time student)
The non-filer rules are applied.
Example:
A married couple with a 20-year-old common child (full-time student) files Married Filing Separately, live together, and mom claims their common child as a tax dependent. The MAGI MC households are as follows:
- Mom's household is 3. (Mom, dad, and child)
- Dad's household is 2. (Dad and mom)
- Child's household is 3. (Child, mom, and dad)
Unmarried Couple
The age of the child affects which rule to apply in determining the child's household if the parents live together but do not file a joint tax return, or if the child is a tax dependent being claimed by a non-custodial parent.
An unmarried couple, Ayinde and Ailani, living together with their son, Abu (19 years old). They file separate tax returns and Ayinde claims Abu as a tax dependent. In this example, the tax dependent rule will be used to determine the household. The MAGI MC households are as follows:
- Ayinde's household is 2. (Ayinde and Abu)
- Ailani's household is 1. (Ailani)
- Abu's household is 2. (Abu and Ayinde)
An unmarried couple, Dmitri and Akai, living together with their daughter, Aiyana (16 years old). They file separate tax returns and Dmitri claims Aiyana as a tax dependent. In this example, the non-filer rule will be used to determine the household. The MAGI MC households are as follows:
- Dmitri's household is 2. (Dmitri and Aiyana)
- Akai's household is 1. (Akai)
- Aiyana's household is 3. (Aiyana, Dmitri, and Akai)
Types of Tax Dependents
Qualifying Child
A qualifying child for tax filing households includes a biological child, stepchild, adopted child, foster child, sibling, niece, nephew, or grandchild. In general, a child can be claimed as a "Qualifying Child" if he/she meets the requirements below:
- U.S. citizen or resident of the U.S., Canada, or Mexico,
- Living with the tax filer for more than half the year,
- Under 19 at the end of the year, under age 24 if a full-time student, or ANY age if disabled, and
- Providing less than 50% of his/her own support.
Note: A child that files taxes may still be claimed as a tax dependent by someone else.
Example
Lucy (27 years old) is a U.S. Citizen who lives with her parents (rent-free) all year. She started a new career but she works as an unpaid intern and has no other earnings.
Can Lucy be claimed as a Qualifying Child?
- No, because she is not under 19 years old, or under 24 years old and a full-time student, or disabled.
Example
Colette (22 years old) is a full-time student who is living on campus at the University of San Francisco. She receives $2,500 from a work-study job and her tuition is $10,000. Her tuition is paid with $5,000 in academic scholarships, $2,000 from Colette's parents, and $3,000 in Stafford loans in Colette's name. Her parents' income is $50,000/year.
| Support | Total Cost | Colette Pays |
| Housing & Utilities | $7,200 | $0 |
| Food | $2,400 | $1,200 |
| Clothing | $1,800 | $1,200 |
| Medical | $2,500 | $0 |
| Education | $10,00 | $3,000 |
| Other | $1,000 | $500 |
| Total | $24,900 | $5,900 (21% of total Support) |
Can Colette be claimed as a Qualifying Child?
- Yes. Even though Colette is living away from home, she is still considered in the home with a temporary absence while attending school. She is also paying less than 50% of her own support.
Note: Support includes educational expenses (loans in the child's name are considered the child's own support).
Qualifying Relative
The tax filer may claim relatives, in-laws, or full-time members of the household as tax dependents. There is no age limit for being claimed as a qualifying relative. In general, other individuals can be claimed as a “Qualifying Relative” if he/she meets the requirements below:
- Cannot be claimed as a “Qualifying Child”,
- U.S. Citizen or resident of the U.S., Canada, or Mexico,
- Related to the tax filer, or if not related, living in the tax filer's home all year (full calendar year),
- Providing less than 50% of his/her own support, and
- Has gross income less than $4,000 (2015).
Note: This gross income changes yearly.
Lucy (27 years old) is a U.S. Citizen who lives with her parents (rent-free) all year. She started a new career but she works as an unpaid intern and has no other earnings.
Can Lucy be claimed as a Qualifying Relative?
- Yes, because she cannot be claimed as a “Qualifying Child” and she meets all of the other above requirements.
Dependent Child Attending School Out-of-State
A child who declares residency in a state where he/she goes to school does not change his/her MAGI MC and APTC household because his/her tax filing status has not changed. The child is still a dependent of his/her parents.
Related Topics
Parent-Child and Stepparent Rules
Joint Custody and Determining Custodial Parent Rules