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December 12, 2018
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Credit for other Dependents [earlier called Family Tax Credit]

Last Update Date : April 30, 2019
Estimated Read Time: 5 min

Credit for Other Dependents

Formerly known as Family Tax Credit, Credit for other dependents is a non-refundable credit given to the qualifying dependents. Let us know more about Credit for other Dependents in this guide by H&R Block India.

Who is a Dependent?

In a layman’s language, a ‘dependent’ is a person who relies on another person for emotional, financial or other support. As per the U.S. norms, a qualifying dependent may be a qualifying child or relative as determined by the Internal Revenue Code (IRC), who is eligible to be a taxpayer’s dependent for claiming dependent-related tax benefits and claims on the tax return.

The Credit for Other Dependents 2018

The Tax Cuts and Jobs Act added a new Tax Credit named Credit for Other Dependents. It is a non-refundable credit and provides $500 per qualified dependent. The earlier version of the bill named this credit as “The Family Tax Credit” but the final version named it as the “Non-child Credit”. Form 1040 references this credit as the “Credit for Other Dependents”.

Examples might include an ageing parent who depends on you for care or a child whose support you provide but is 17 years old or older.

This credit is available for dependents for whom the taxpayers cannot claim the New Child Tax Credit 2018.

Qualifying Requirements

The IRC Test is applied to determine whether the dependent is a qualifying child or a qualifying relative to the taxpayer. A person must fulfil all the tests to be qualified for claiming dependency-related credits.

Qualifying Child

  • The dependent may be the taxpayer’s biological child, adopted or eligible foster child, sibling or half-sibling, stepsibling, or an offspring of any of the cases.
  • The dependent may not have already been claimed for the Child Tax Credit or other dependency credits by the taxpayer.
  • The dependent, as well as the taxpayer, must be a U.S. Citizen or a U.S. Resident Alien or U.S. National, a Canadian Resident or a Mexican Resident.
  • They are under the age of 19 (or 24 if a full-time student).
  • The dependent has lived with the taxpayer for more than half the year.
  • The dependents are provided with more than 50% for their support.

Qualifying Relative

  • They have not been claimed for the CTC or the Credit for Other Dependents.
  • They are required to be a U.S. Citizen or a U.S. Resident Alien or U.S. National, a Canadian Resident or a Mexican Resident.
  • They are not filing a joint return with their spouse.
  • They have lived with the taxpayer for the entire year or are related to the taxpayer.
  • They have a gross income of less than $4,150 in 2018.
  • They are provided with more than 50% for their support.

Some exceptions

    • A qualifying relative is not required to be related to the taxpayer. However, a non-relative is required to have lived with the taxpayer for the entire year.
    • A true relative is not required to live with the taxpayer for the entire year, if:
      1. The relative is the taxpayer’s biological child, adopted or eligible foster child, sibling or half-sibling, stepsibling, or an offspring of any of the cases.
      2. The relative is biologically related, such as direct ancestor of the taxpayer, stepparent, aunt, uncle, son or daughter-in-law, father or mother-in-law, brother or sister-in-law.

Amount of Credit for Other Dependents

  • Is worth $500 for each qualifying dependent.
  • Is non-refundable as mentioned in Form 1040.
  • The phase-out begins at AGI of $200,000 for individual filers and $400,000 for joint filers, as mentioned in the New Child Tax Credit as compared with 2017 amounts of $110,000 for couples and $75,000 for single
  • The dependent does not require a valid Social Security Number (SSN), unlike the Child Tax Credit, to claim the Credit for Other Dependent. Even having Individual (ITIN) or Adoption Tax Identification Number (ATIN) will be sufficient to claim this additional credit.

Impact of Credit

  • The Taxpayers will be able to claim the new credit for the dependents, that these taxpayers have claimed a Dependency Exemption for in the past.
  • This change has affected a family’s tax situation by reducing the tax liability in a particular year by claiming this credit.
  • The credit is available for children who would otherwise qualify for a Child Tax Credit but failed to have a valid SSN.

Elimination of Dependency Exemption

Earlier the Taxpayers were accredited with a dependency exemption of over $4000 for each individual on the tax return. After the Congress passed the New Tax Law 2018, the Children’s Dependency Exemption has been eliminated from current tax year. In place of the Dependency Exemption for each child, the Law has increased the standard deduction to $12,000 for parents who are married but filing separate returns; $18,000 for the heads of household and $24,000 for parents who file tax returns jointly.

People Also Ask

Q. Does the Credit for Other Dependents also include elder dependents?

A. Yes, the Credit for Other Dependents also includes older dependents, if they are above the age of 18, or at the age of 23 (still in school and not earning) and having the SSN or ITIN.

Q. Is the child support based on Income or Expenses?

A. It is based on your income level. But if the child is not provided with more than 50% of the support than the credit will not be accredited and does not fall under the category of a qualified child.

Q. Can both the parents claim for the same child if they are filing married filing separate returns?

A. No, if you are filing MFS return, the child can be claimed by only one of the parent on their return and can’t be claimed by both of them.

Q. Can I claim credit for other dependents along with CTC?

A. No.

We hope that this guide by H&R Block India will help you know more about the new tax credit added by TCJA named Credit for Other Dependents under the U.S. Tax laws and file your returns accurately.

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Anshu Jain
Anshu Jain is the Manager, Offshore Operations at H&R Block (India). She holds an MBA in Finance and has an experience of over ten years in business operations, U.S. tax advisory and program management. When she is not working, Anshu enjoys reading and writing about U.S. taxation.

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