Being a caretaker for adult children, relatives, or parents can create an additional financial strain for taxpayers. To ease the burden of these scenarios, the IRS created a specific tax credit called the “credit for other dependents.”
This credit applies to taxpayers with qualifying adult dependents and children who are too old to qualify for the child tax credit. These children would still qualify as their parents' dependents for purposes of the child tax credit but exceed the child tax credit’s age limit.
How Much Is the Credit for Other Dependents?
The credit for other dependents provides a $500 tax credit for each qualifying dependent you can claim. It’s not a refundable credit, either, so the best it can do is reduce or eliminate your tax bill. It’s subtracted directly from any tax liability you might owe the IRS, but the IRS won’t send you a refund for any portion of it that’s left over.
Who Qualifies as a Dependent?
Your dependent doesn’t have to be your child; the credit covers parents, stepparents, grandparents, siblings, aunts, uncles, in-laws, and even individuals who aren't related to you. In most cases, the key is how much financial support you gave the individual.
The IRS provides the following guidelines for dependent qualifications. These are general guidelines for dependent status that can affect multiple tax credits and deductions:
- You must provide more than half of your dependent’s financial support over the course of the tax year. They might or might not have to live with you throughout the year as well—it depends on their degree of relation to you. The tax code exempts some relatives from this rule, such as your parents—provided that you provide more than half their support while they’re living elsewhere.
- Your dependent must also be a U.S. citizen, a U.S. resident, or a U.S. national.
- Your dependent isn’t required to have a Social Security number, but they must have a tax identification number (TIN) if they meet the other tests.
The IRS provides an interactive tool on its website to help you determine whether you and your dependent qualify. It takes about 10 minutes to complete.
Children who qualify for the child tax credit do not qualify for the credit for other dependents; it's not an either/or choice.
How Your Dependent's Income Affects Your Tax Credit
Claiming dependents for the credit for other dependents is subject to other rules, too. Adult dependents—those who can’t qualify for the child tax credit—are limited to gross incomes of less than $4,300 as of tax year 2021.
How Your Income Affects Your Tax Credit
The credit for other dependents starts to phase out if you earn more than $400,000 and are married and filing jointly, or more than $200,000 for all other taxpayers.
The income threshold is indexed for inflation, so expect it to increase periodically to keep up with the economy.
An exception to this rule exists if your dependent is disabled and earns money from a “sheltered workshop," which is a school that offers programs designed to alleviate your dependent’s disability and is run by certain tax-exempt organizations or government entities.
How to Claim the Credit for Other Dependents
You must claim the individual as a dependent on your Form 1040, along with providing their TIN or Social Security number, which goes in Column 2 of the dependent section on your return. Then simply check the box for the Credit for Other Dependents in Column 4.
You must also file IRS Form 8862 with your Form 1040 if you've previously tried to claim the child tax credit, the additional child tax credit, or the credit for other dependents and were denied for any reason other than a simple clerical or math mistake.
How Do You Calculate the Credit for Other Dependents?
For most taxpayers, the credit for other dependents is a flat $500 per qualifying dependent, so you can simply multiply $500 by the number of qualifying other dependents you have, and subtract the total from your tax obligation. The credit cannot reduce your tax obligation below zero. If you make more than $200,000 (single) or $400,000 (married filing jointly), your tax credit will phase out roughly $50 for every $1,000 you make over the cutoff. The easiest way to make sure you calculate it correctly is to use the IRS calculator.
What Is the Difference Between the Child Tax Credit and the Credit for Other Dependents?
The credit for other dependents is much smaller than the child tax credit and applies to more qualifying relatives than just your children. If you have children who are age 17 or younger, the child tax credit is your best option for them. Otherwise, you can see whether older children and other relatives who depend on you qualify you for the credit for other dependents.