The Internal
Revenue Service has an extensive list of tests in order to determine whether
someone can qualify as a dependent (Internal Revenue Service, 2012). The
complexity of these tests deter many people from claiming those they support as
dependents. For two reasons, the dependency test should simply be whether the
taxpayer provides more than half of the financial support to another person.
First, the dependents’ relationship to the taxpayer and whether the dependent
lived with the taxpayer during the year have very little to do with determining
if they are dependent upon the taxpayer. Second, the purpose of claiming
dependents is to receive tax relief for financially supporting the said dependent.
Since a taxpayer may provide
financial support to anyone anywhere, the relationship and location portions of
the dependency test are irrelevant. Just because someone isn’t related doesn’t
mean the taxpayer can’t provide financial support. Taxpayers deserve tax
assistance whether or not the person they’re helping is a relative. Similarly,
taxpayers often help those who do not live with them during the year. However,
since the beneficiary doesn’t live with the taxpayer, the taxpayer doesn’t get
a dependency claim (IRS, 2012). Both of these situations are unfair to taxpayers
willing to help others.
When taxpayers are unable to
claim beneficiaries as dependents, they forego tax credits that should be
awarded them. Even dependents who are Qualifying Relatives don’t give nearly
the same benefits as Qualifying Children to taxpayers (“Tax Guide,” 2014).
Qualifying Relatives aren’t eligible for the child tax credit or the Earned
Income Credit (EIC) like Qualifying Children are (“Difference,” 2009). Both of
these credits reduce the amount of income a taxpayer must pay taxes on and can
be refunded. Those who can’t qualify as either aren’t eligible for dependency,
and the taxpayer gets no relief at all (IRS, 2012).
By limiting the ways to claim a
dependent, those who help others are harmed. Taxpayers should be able to claim
anyone they provide significant financial support to as dependents—regardless
of relationship or location. This way they can receive tax credits and refunds
to continue helping others.
References
A “Qualifying Child”. (2012, August 8). Retrieved from Internal Revenue
Service http://www.irs.gov
U.S. Master Tax Guide 137B Qualifying Relative Definition. (2014). Retrieved from
Wolters Kluwer CCH http://intelliconnect.cch.com.dist.lib.usu.edu/scion/secure/ctx_3094608/index.jsp?cpid=WKUS-TAA-IC#page[3]
What is the difference between qualifying child and
qualifying relative? (2009). Retrieved from http://answers.yahoo.com