When dealing with income taxes, the taxpayer is given credit for certain types of expenses. Many times the credit is given as a flat amount, based on what the government considers to be reasonable costs for a particular situation. A dependent deduction is typically the standard amount that the US Internal Revenue Service (IRS) allows a taxpayer to take off of the amount owed in taxes because he or she has been supporting a dependent. Something similar exists in many countries, but it is not necessarily called a dependent deduction.
The IRS has rules that specify what constitutes a dependent. If a person files taxes and tries to claim a person who does not meet the IRS requirements, the deduction will be disallowed. At that point the full amount of the dependent deduction becomes due, and most likely there will also be penalties assessed on the amount that wasn’t paid.
If there is any doubt as to whether or not a person qualifies as a dependent under IRS rules, it is best to check before filing taxes. The IRS requires that a qualifying child must not have supported him or herself for more than half the year and cannot have filed a joint return with anyone. The child must also typically be the filer’s child, step-child or adopted child, and must live with the taxpayer.
There are additional rules, plus there are regulations for other dependent persons that may qualify for the dependent deduction. The person does not have to be the taxpayer’s child in every case, but can instead be another relative. This can include a parent, grandparent, aunt, uncle or other relative; to be accepted the relative must meet the IRS criteria for a qualifying dependent, which typically includes living with the taxpayer and certain other criteria.
When a taxpayer has a relative that qualifies under the IRS rules, he or she can take the standard dependent deduction. The actual amount varies each year, but in 2010 it was $950 US Dollars (USD). This amount is used to reduce the taxpayer’s adjusted gross income, resulting in a lower tax liability. The amount may be adjusted for any of a number of reasons, including the dependent’s age, whether or not he or she is blind, and if the person purchased a new vehicle and had to pay taxes on it. Other factors may be considered as well.