The criteria for a qualifying dependent can be a bit tricky. Most people stick to claiming their children and other relatives as dependents. However, you may also be able to claim an unrelated dependent, such as a domestic partner, especially when it comes to tax refunds.
The Internal Revenue Service allows filers to claim two types of dependents on their income tax returns. Qualifying relatives and qualifying children. Qualifying relatives do not have to be related by blood or under marriage, laws to be claimed as a dependent on your tax returns and that indicates that are entitled to tax refunds.
Defying A Domestic Partner For Tax Refunds
A domestic partnership is an alternative official relationship status to a married state. The IRS does not consider it a marriage under state law. Therefore, partners in a registered domestic partnership who are not married and not considered so for federal tax purposes. Thus they may not file a federal return using either a Married & Filing Jointly status or a Married & Filing Separately status.
Before the Supreme Court decided to legalize same-sex marriage in 2015. Most domestic partners were in same-sex marriage.
Value Of Being Declared A Dependent For Tax Refund Purposes
Under US law a person who relies on someone for financial support is considered a dependent. It can include relatives other than children. Thus being considered a dependent entitles filers to claim an exemption as a dependent on their income tax refund. But that is as long as the dependent meets the qualifying definition as laid down by the IRS.
Filers who can prove that they have a dependent also may be eligible to use this filing status and get certain tax credits, including tax refunds.
Earlier you could claim an exemption in your income tax if you claimed a dependent. But after the Tax Cuts and Jobs Act of 2017, you are no longer entitled to claim a personal exemption either for your, dependents, or your spouse, the IRS has clarified.
But while you are not allowed to reduce your taxable income by showing a dependent, you are entitled to receive up to $500 as a tax refund for every qualifying dependent who is an adult. For dependent children, the tax refund is four times at $2,000. This tax refund can be claimed as part of your income tax return.
The key takeaways are that a person is considered a dependent for income tax purposes if they rely on someone else for financial support and can include children or other relatives.
If a filer claims one or more dependents while filing their income tax returns, they are eligible for several credits. The child tax credit refund comes to $2,000 per child, down from the $3,600 maximum that could be claimed a year back.
Under normal circumstances, a person who is a joint filer as a married person cannot be claimed as a dependent on another person’s income tax return for purposes of a tax refund.
To be claimed as a dependent, a person must be a citizen or a resident alien of the US, an American national, or a resident of Mexico or Canada.
Dependency And Its Working In Case Of Tax Refunds
A qualifying child or another qualifying relative is considered a dependent in its simplest term. The status of a dependent for returns and tax refunds is determined by the IRC test.
To be considered for the status of a dependent, 3 tests must be met for every dependent. They are the dependent taxpayer test, the resident or citizen test, and the joint return test.
Anyone who is claimed as a dependent by another taxpayer may not claim anyone as a dependent on their income tax return. Also, anyone who has filed a joint return, being a married person, is not permitted to be claimed as dependent by another person on their income tax return, nor are they allowed to claim a tax refund.
But the exception to this case is that the dependent is filing a joint income tax return only to claim a refund of income tax paid as an estimated tax or withheld.
Claiming A Domestic Partner As A Dependent
You can claim your domestic partner as a dependent on their income tax return if they fall under the rules for qualifying relatives for the determination of dependency status and tax returns. It is not necessary that dependents have to be related to being claimed on income tax returns.
It becomes tough for a non-relative to conform to all the conditions that are necessary to be claimed as a dependent, especially when it comes to tax refunds. It becomes more tog if the domestic partner also holds a job or earns an income from other sources.
Especially daunting to surmount is the income limit. Even seasonal or part-time jobs can bring in an income above the $4,400 limit for the 2022 financial year. For a person working a mere ten house a week at a minimum hourly wage of $9 would lead to an earning that is way above the limit set y the IRS in determining a dependent.
Domestic partners will not be considered eligible if they have a higher income and thus will not be entitled to a tax refund as a dependent.
It is important to remember that partners must be living together for the entire year to be considered a qualifying dependent. If partners have moved in together in the middle of a year, they will have to wait for another year and live together before they can claim their partner as a dependent and claim an income tax refund. When it comes to other issues linked to living arrangements for income tax purposes, certain temporary absences is overlooked. For instance, if one partner takes off for a vacation, or is deployed in the military, they will still be considered living together and will be entitled to a tax refund.
The IRS has specified the instance when a temporary absence will not be ground to deny a couple the status of a dependent for purposes of filing and tax refunds. They include illness, that is the time the partner spends in a medical facility including a rehabilitation center. Business assignments and travel, vacations, education-related absences, or absence from military services, are the other ground when an absence will be considered acceptable.
