Most of the time, taxpayers claim their children as dependents on their income taxes. Under certain circumstances, you might be able to claim a non-relative on your income taxes as well. However, the requirements for claiming a non-relative are more rigorous than claiming a qualifying child, or even an adult family member.
Not as a Qualifying Child
The IRS does not allow you to claim non-relatives as dependent children on your income taxes unless you legally adopted the child. In the event of an adoption, the adopted child is treated as a natural child. You can claim until the child reaches age 19, or 24 if the child is a full-time student.
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The child also must live with you for over half the year, with exceptions for schooling, business, military service or business, and the child cannot have provided more than half his own support. However, a non-relative dependent cannot qualify you for child tax credits (unless legally adopted).
Consider also: Adoption Tax Credit: What Is It & How to Qualify
Member of the Household Test
In order to qualify a dependent non-relative, the non-relative must live with you for the entire year as a member of your household. The IRS does permit exceptions for school, business, illness or military service. In addition, you cannot claim the non-relative as a qualifying child on another person's income tax return.
For example, if someone lives with you, but can be claimed on his father's income tax return, you could not claim him as a dependent. This would be the case for a boarding student.
Limited Income for the Non-Relative
The non-relative cannot qualify as your dependent if her income for the year exceeds the annual limit. The IRS sets the income limit. As of 2021, the income limit is $4,300. Gross income includes all taxable income, such as self-employment income, wages, rental income and taxable unemployment compensation. Do not include nontaxable compensation when calculating the non-relative's gross income.
In the case of a maid, a nanny, or a housekeeper who lives in your home, you cannot claim them as a dependent as long as they work for you. However, in the case of a nanny, their employment qualifies as a child care expense and could earn you up to $4,000 credit on your taxes for one child dependent and $8,000 credit for two or more children under the Child and Dependent Care Tax Credit for the 2021 tax year.
Consider Also: Child & Dependent Care Credit Requirements and Qualifications
Must Provide Over Half Support
Unlike claiming a child dependent, whereby the support test requires that the child not provide more than half of their own support, you can only claim a non-relative as a dependent if you provide more than half of their support.
To calculate support, add expenses incurred to support the person during the year, such as living quarters, food, medical care and other necessities. Divide the total by two and if the total amount you paid to support the non-relative during the year exceeds the result, you satisfy the support test.