Current Rules (2008) for
Dependency Exemption Claims

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Each dependency exemption you claim on your tax return for 2008 is the equivalent of a $3,500 deduction. And, while most dependency exemptions for children are claimed by parents or other relatives, that's not always the case. If you help support a child who is not related to you, you may be entitled to a dependency exemption if certain requirements are met.

For example, suppose a taxpayer lives with a friend and the friend's child during the year. The IRS says that the taxpayer can generally claim a dependency exemption for the child if four conditions are met:

  1. The taxpayer pays more than 50% of the cost of maintaining the household.
  2. The taxpayer provides more than 50% of the child's total support.
  3. The child's gross income does not exceed the exemption amount ($3,500 for 2008).
  4. The taxpayer's friend does not have enough income to file a tax return, or files a return only to claim a refund of withheld taxes.

Of course, simply telling the IRS that you provide more than 50% of a child's support will not nail down the dependency exemption; you must be able to prove it. You must keep records and receipts that show (1) the total of the child's support for the year from all sources and (2) how much of that support came from you.

For this purpose, support is not limited to necessities, like food, clothing, shelter and medical care. It also includes such items as toys, televisions, bicycles, and pets. Expenses that are not directly related to any one member of a household, such as the cost of food for the household or rent payments, must be divided among the members of the household. If the child lives in a home you own, a portion of the fair rental value of the home is treated as support you provide the child.

If you support a child who is not related to you and have questions about whether you can claim a dependency exemption for the child, please contact us. We can help you determine if you meet the IRS's requirements.

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