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- Does Having a Dependent Affect Your State Tax Return?
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- Federal Tax Liability of Dependent Minors
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The more dependents you can claim on your taxes, the lower your tax bill is likely to be. The IRS allows you to claim an exemption for yourself, your spouse and for each dependent you support. Usually, your dependents are your children, but dependents may also be other children or relatives who live in your household or elderly parents you support. An exemption deducts money from your income to reduce your taxable income. But the IRS verifies your dependents to make sure these deductions are legitimate – otherwise you might be tempted to claim your cat Felix and your dog Oscar as dependents, as well as your daughter’s boyfriend who appears to spend most of his time at your house.
The primary tool the IRS uses to verify dependents on your tax return is Social Security numbers. You must supply the Social Security number for every dependent you claim. You’ll need to obtain a Social Security number for your new infant. The IRS computers compare the legal names and Social Security numbers of your dependents with the information in the Social Security database. If the names and Social Security numbers don’t match, the IRS computer kicks out the return with an error code and you’ll be asked to correct the information.
If your dependent is a resident alien or nonresident alien who doesn’t qualify for a U.S. Social Security number, you must supply their taxpayer identification number in lieu of their Social Security number. The dependent must submit an application to obtain a TIN. If you are in the process of adopting a child from another country and the child lives with you, the child may not be eligible for either a Social Security number or a TIN. In this case, you must apply to the agency handling the adoption for an adoption taxpayer identification number. As with Social Security numbers, the IRS matches the information you supply about your dependents on your tax forms with the information in TIN and ATIN databases as a way of verifying the validity of your dependent.
The same person can’t be claimed as a dependent on more than one return. A divorced or separated or never-married mother and father can’t both claim their child as a dependent in the same year. The IRS computers look for the names and Social Security numbers of dependents who are claimed on more than one tax return and will take a closer look at both returns and try to determine who has the legitimate claim to the child as a dependent. If you are a child’s non-custodial parent and you and the custodial parent have agreed that you will take the deduction for the child this year, you must complete a Form 8332 and attach the form to your tax return. This form authorizes you to claim the child as a dependent for that tax year.
If the IRS has questions about the legitimacy of the dependent you claim – for instance, you claim a younger sister as a dependent – auditors may verify your claim by examining school records, medical records or birth certificates. These records help establish your claim that the dependent lives with you and that you support her.
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