The dependent exemption allows you to reduce your taxable income by subtracting the exemption amount for every child for which you provide a certain amount of financial support. The dependent exemption is not an itemized deduction -- you can use it even if you don't itemize your deductions, and you can use it together with the standard deduction. You claim the exemption on Form 1040.
At the time of publication, you are allowed to deduct $3,700 from your taxable income for each qualifying child. If you have three qualifying children, for example, your exemption is worth $11,100. Add in a personal exemption for yourself, and the total comes to $14,800. This amount is adjusted upward every tax year to account for inflation.
The Qualifying Child Test
The qualifying child test can be used to determine whether or not you can claim a child as an exemption. A qualifying child must be your son, daughter, stepchild, foster child, sibling, half-sibling, step-sibling or a descendent of any of these relatives, such as a nephew or a grandchild. Generally, a qualifying child must be under 19 at the end of the year. If he is a full-time student, however, he can be up to age 23. You can claim your child at any age if he is permanently and totally disabled. He must have lived more than half the year with you, and he must not have provided more than 50 percent of his own financial support.
The Qualifying Relative Test
Your child may qualify as a qualifying relative even if she is not a qualifying child. To qualify as a relative, your child must have earned a gross income for the tax year of less than $3,700, and you must have provided more than 50 percent of her support for the tax year. She does not have to live with you, and there are no age limitations.
If more than one taxpayer is eligible to claim an exemption for the same qualifying child or relative, only one taxpayer can claim the exemption. You are disqualified from claiming an exemption for a qualifying child or relative if you could be claimed as an exemption by another taxpayer. Under most circumstances, you cannot claim a married child who files a joint tax return. Your child must be a U.S. citizen, a U.S. national, a permanent resident of the U.S. or a resident of Canada or Mexico to qualify, although an exception applies if you adopt a non-U.S. citizen who lives with you abroad.
David Carnes has been a full-time writer since 1998 and has published two full-length novels. He spends much of his time in various Asian countries and is fluent in Mandarin Chinese. He earned a Juris Doctorate from the University of Kentucky College of Law.