How you can deduct an adult child as a dependent

Q. My son is 23 and he doesn’t have a full-time job yet. What are the rules on me deducting him as a dependent?
— Prepping my taxes

A. As more young adults live at home while trying to build a career or save money after college, this is a pretty common question.

Based on the definition of a qualifying dependent, your son would have to live with you and you’d need to provide more than 50 percent of his support, said Joe Matheson, a certified public accountant with Matheson & Assoc. in Whippany.

“He cannot make more than $4,000 for the year unless he is a full-time student,” Matheson said. “He cannot be claimed as a dependent of someone else — including himself if he files a return.”

This assumes your son is a citizen and he has a Social Security number.

The IRS has designed five tests to determine whether a child or dependent can be considered an exemption.

In order for you to claim an exemption for a dependent, Matheson said, all requirements must be met. Let’s go into more detail here.

Your dependent must either be a U.S. citizen, a resident of the U.S., Canada, or Mexico for part of the year, a legally adopted foreign child who now resides in the U.S. or an adopted child living with you the entire year in a foreign country, Matheson said.

Your dependent must either be a relative or a member of your household for the entire year.

“Relatives do not need to live in your house to qualify as a dependent exemption,” Matheson said. “Non-relatives can be claimed as dependent exemptions only if they also live in your house.”

Matheson said your dependent cannot file a joint return with a spouse.

“This means that a taxpayer is allowed to claim a married dependent as an exemption if all other four tests are met and the dependent uses the married filing separately status,” he said.

Also, to qualify for an exemption, your dependent cannot have a gross income of more than $4,000, although there are exceptions to this rule.

Matheson said you can disregard the gross income test if your child, and the child is under age 19 on Dec. 31 of the tax year, or if your child is under 24 on Dec 31 of the tax year, or if the child is a full-time student for at least five months during the tax year.

“If your child is a full-time student, be sure to enter 12 months as the amount of time they lived with you,” Matheson said.

You can also ignore the income test if your child is a permanently and totally disabled person and receives an income for services performed for a tax-exempt organization, he said.

Also remember your must receive more than one half of his/her total support from you.

Karin Price Mueller writes the Bamboozled column for The Star-Ledger and she’s the founder of NJMoneyHelp.com. Click here to sign up for the NJMoneyHelp.com weekly e-newsletter. Like NJMoneyHelp.com on Facebook and follow it on Twitter.