Most parents strive to raise self-sufficient teenagers and young adults. For many parents, that means fostering a sense of financial independence in their children. Parents may be proud when their teenager takes a full- or part-time job to help contribute to some of their living or entertainment expenses — or to save for college.
But when tax time rolls along, your sense of pride might be replaced by a sense of uncertainty and confusion. Can you declare your teenager as a dependent on your taxes if they have a full-time or part-time job as a W-2 employee?
Fortunately, someone’s status as a dependent is not determined by how much money they make or even their bank account balance, savings, or investments. Rather, the IRS defines a dependent based on other factors.
For starters, to qualify as a dependent child, your teen must be under 19 years old at the end of the tax year. A full-time student under the age of 24 may also qualify.
To be declared a dependent on your tax returns, your teen cannot declare anyone else as a dependent on their tax returns. For instance, if your teen had a young child and they were responsible for more than 50% of that child’s living expenses — and declared that child as a dependent — you cannot claim your teen as a dependent. Your teen also cannot be claimed by another individual as a dependent concurrently with you, unless you’re filing jointly with a spouse. Lastly, you cannot be claimed as a dependent, yourself, while claiming dependents of your own.
Let’s assume your teenager has no children, though, but they do have a full-time job. You encourage them to save for college, so you don’t charge them rent to stay in your home. You supply most of their meals and household necessities. They have lived with you more than half the year, apart from time spent away at college or boarding school, if that applies to your situation. As long as you cover more than 50% of your teen’s total living expenses — and they meet the other conditions — you can declare them as a dependent on your tax returns.
In recent years, tax exemptions and deductions for dependents have been eliminated, but you can still claim the fully refundable child tax credit for 2021 if you have teens you claim as dependents. Additionally, if you are claiming the earned income tax credit (EITC), this credit increases based on the number of dependent children you have.
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