The IRS is reminding families about the Credit for Other Dependents, a tax credit available to taxpayers for each of their qualifying dependents who cannot be claimed for the Child Tax Credit. The maximum credit amount is $500 for each dependent who meets certain conditions, including:
- Dependents who are age 17 or older.
- Dependents who have individual taxpayer identification numbers.
- Dependent parents or other qualifying relatives supported by the taxpayer.
- Dependents living with the taxpayer who aren’t related to the taxpayer.
The credit begins to phase out when the individual taxpayer’s annual income is more than $200,000 — for married couples filing a joint tax return, the phaseout begins at $400,000.
A taxpayer can claim this credit if:
- He or she claims the person as a dependent on the taxpayer’s return.
- He or she cannot use the dependent to claim the Child Tax Credit or Additional Child Tax Credit.
- The dependent is a U.S. citizen, national or resident alien.
More good news: Taxpayers can claim the Credit for Other Dependents in addition to the Child and Dependent Care Credit and the Earned Income Credit, for maximum tax effectiveness.
To find out what credits you’re entitled to and how to calculate them, contact a BPW advisor at (805) 963-7811.