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Tax Filing Requirements for Dependents in California

Identifying tax filing requirements for dependents in California with Cook CPA Group. Roseville, CA tax accountants of Cook CPA Group discuss state tax laws and how to claim a dependent on your income tax return in California.

Every taxpayer wants to save as much money on their tax bill as possible. Claiming a dependent may make it easier to reach that goal. If you have a child, or if you provide care for an elderly or disabled family member, you may be able to save on your taxes by claiming your loved one as a dependent. However, the new tax laws have also brought some major changes to this process. Depending on your unique financial situation, claiming a dependent on your California or federal income tax return could reduce your taxable income by thousands of dollars. Additionally, you may be eligible for the Child Tax Credit or other tax credits for parents. If you need help filing your California or federal taxes, ask about our Roseville tax preparation services in a free consultation with Cook CPA Group today.

IRS Dependent Rules and Tax Filing Requirements

The Internal Revenue Service (IRS) defines a dependent as “a person, other than the taxpayer or spouse, who entitles the taxpayer to claim a dependency exemption.” Depending on your unique situation, this “person” could either be a “qualifying relative” or a “qualifying child.”

Who Can Be Claimed as a Dependent?

The IRS uses specific criteria to determine whether someone is a qualifying child or qualifying relative. For example, your child must pass five separate tests to be considered a “qualifying child,” including:

  1. The age test
  2. The joint return test
  3. The relationship test
  4. The residency test
  5. The support test

In turn, each of these tests comes with requirements of its own. For instance, in order to pass the age test, your child must either:

  • Be 18 or younger at the end of the year
  • Be a student who is 23 or younger at the end of the year
  • Be completely, permanently disabled at any time during the year, with no restrictions on age

There are also some other important tax rules for dependents to keep in mind. For example, if you are married, you should know that you generally cannot claim your spouse as a dependent. You should also know that the dependent must be a U.S. citizen (or U.S. resident), and cannot claim a dependent of their own.

2018 Dependent Deductions Under the New Tax Law

It is also crucial to understand how last year’s federal tax reform act, or Tax Cuts and Jobs Act (TCJA), may affect your ability to deduct dependents for the 2017 tax year or upcoming tax years. While you may use dependent exemptions to lower your taxable income by up to $4,050 for tax years prior to 2018, the TCJA has suspended dependent exemptions for tax years 2018 through 2025. However, you can claim a larger standard deduction than in the past: $12,000 if filing individually, $24,000 if filing jointly with your spouse, and $18,000 if you are the head of your household. Additionally, you may be eligible to claim the Child Tax Credit (CTC), which will double from $1,000 per qualifying child (for the 2017 tax year) to $2,000 per qualifying child (for the 2018 tax year).

Our Roseville tax accountants can help you understand the rules and criteria for claiming dependents, and how they impact your family when you are filing your tax returns.

The Child and Dependent Care Expenses Credit

One of the major tax authorities in California is the Franchise Tax Board (FTB). Working alongside other state tax authorities like the California Department of Tax and Fee Administration (CDTFA) and the Employment Development Department (EDD), the FTB reviews personal and business state income tax returns, issues tax refunds, and, where necessary, conducts tax audits.

As the FTB explains, you may qualify for a tax credit called the Child and Dependent Care Expenses Credit if you care for a dependent and meet certain additional criteria. Eligibility criteria for the Child and Dependent Care Expenses Credit include the following:

  • The amount you spent on childcare (or dependent care) was equal to or less than the amount of income you earned
  • Your adjusted gross income (AGI) was under $100,000
  • You have a “qualifying individual,” which, depending on other factors, could mean any of the following:
    • A dependent who is age 12 or younger
    • A dependent “who is physically or mentally unable to care for him or herself”
    • Your spouse, but only “if he or she is physically or mentally unable to care for him or herself”

California Tax Preparation and Planning Services in Roseville and Sacramento

You may qualify for substantial tax credits if you provide care for a child or dependent in California. Let the experienced personal tax accountants of Cook CPA Group help you look for ways to reduce your tax bill while helping you comply with the Internal Revenue Code. For a free consultation about California or federal taxes, contact us online, or call (916) 432-2218 today.