Many people think of a dependent as a minor child who lives with you. This is true, but it can also include parents, other relatives and nonrelatives, and even children who don’t live with you.

Exemptions and your taxable income

Each dependent deduction is worth $4,050 on your 2016 and 2017 federal income tax returns. The exemption reduces your taxable income by this amount.

You’ll lose part of the benefit when your adjusted gross income reaches a certain level. For 2016, the phase-out begins at $311,300 when you’re married filing jointly and $259,400 when you’re single.

Definition of a dependent

A dependent is a qualifying child or relative. Generally, this is someone who lives with you and who meets several tests, including a support test.

For qualifying children, the support test means the child can’t have provided more than half of his or her own support for the year.

For qualifying relatives, the support test means you generally must provide more than half of that person’s total support during the year.

There are many exceptions.

For example, parents don’t have to live with you if they otherwise qualify, but certain other relatives do. If you’re divorced and a noncustodial parent, your child doesn’t necessarily have to live with you for the deduction to apply.

Who can’t I claim?

Your spouse is never your dependent. In addition, you generally may not claim a married person if that person files a joint return with a spouse.

Also, a dependent must be a U.S. citizen, resident alien, national, or a resident of Canada or Mexico for part of the year.

For a seemingly simple deduction, claiming this exemption can be quite complex.

You want to get it right because being able to claim dependents can lead to other tax benefits, including the child tax credit, education credits, and the dependent care credit.

Have questions about the dependent deduction? Let’s talk!