Claiming In-Laws As Dependents: What You Need To Know

Whether you can claim your in-laws as dependents depends on several factors. The IRS defines a dependent as a qualifying child or relative who relies on you for financial support. To be considered a qualifying relative, your in-laws must meet specific criteria, including being a US citizen, resident alien, or national, or a resident of Canada or Mexico. Additionally, they must not be claimed as a dependent on another tax return and must have a gross income below a certain threshold. To claim your in-laws as dependents, you may need to provide over half of their financial support for the year and meet other requirements, such as living with them for more than half of the year. It is important to carefully review the IRS guidelines and consult a tax professional to determine if you can claim your in-laws as dependents on your tax return.

Can I claim my in-laws as dependents?

Qualifying relatives

To claim a dependent on your tax return, the dependent must be a qualifying child or relative who relies on you for financial support. A dependent must be a U.S. citizen, resident alien, or national, or a resident of Canada or Mexico. They must also meet specific requirements.

• Child, stepchild, or foster child
• Descendant of any of the above (e.g. grandchild)
• Legally adopted child
• Brother, sister, half-brother, half-sister, stepbrother, or stepsister
• Father, mother, grandparent, or other direct ancestor, but not a foster parent
• Stepfather or stepmother
• Son or daughter of your brother or sister
• Son or daughter of your half-brother or half-sister
• Brother or sister of your father or mother
• Son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law

It is important to note that a qualifying relative cannot be anyone's qualifying child. Additionally, certain qualifying relatives do not have to live with you all year as a member of your household.

To claim your in-laws as dependents, they must meet the requirements for a qualifying relative. This includes meeting the "not a qualifying child" test, as well as the "member of household or relationship" test. To meet the "member of household or relationship" test, your in-laws must live with you all year as members of your household or be related to you in specific ways, as outlined in the list of qualifying relatives above.

Additionally, to claim your in-laws as dependents, you must be able to claim over half of their support for the year. This includes all money spent supporting them, including food stamps, housing assistance, and other government assistance.

It is also important to consider the potential impact on your in-laws' federal/state benefits. Claiming them as dependents may affect their actual or potential benefits, so this should be carefully evaluated before making a claim.

Relationship tests

To claim your in-laws as dependents, they must meet the criteria for a qualifying relative. The Internal Revenue Service (IRS) outlines the following tests to determine whether an individual is a qualifying relative:

Relationship Test

The individual must be related to you in one of the following ways: son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law. This relationship criterion must be met for an individual to be considered a qualifying relative.

Gross Income Test

The potential dependent must have a gross income below the threshold set by the IRS. For the 2023 tax year, the individual's gross income subject to tax must be less than $4,700, and for the 2024 tax year, the limit increases to $5,050. This test ensures that the dependent's income does not exceed a certain level.

Total Support Test

You must provide more than half of the total financial support for your in-laws during the tax year. This means that your contribution to their overall financial maintenance, including living expenses, medical care, and other essential needs, must exceed 50% of their total support for the year.

Member of Household Test

While not always mandatory, it is generally advantageous if your in-laws live with you as members of your household for the entire tax year. This condition strengthens your claim and demonstrates a closer degree of dependency.

It is important to note that the specific criteria and thresholds may vary slightly from year to year, so it is always advisable to refer to the most up-to-date IRS guidelines when determining whether you can claim your in-laws as dependents for a particular tax year.

Support tests

To claim someone as a dependent, they must be either a qualifying child or a qualifying relative. To be a qualifying child, the child must meet five tests: age, relationship, residency, support, and joint return. The support test is a crucial measure of whether a taxpayer should be able to claim someone as a dependent.

The support test mandates that the taxpayer must have provided more than half of the prospective dependent's living expenses during the year. Living expenses include meals, lodging, clothing, medical and dental care, transportation, recreational activities, and anything else that a parent would normally provide for a child or other dependent. The child must not have provided more than half of their own support for the year.

The support test is related to the relationship and residence tests, but the prospective dependent does not have to live with the taxpayer to pass the support test. The taxpayer must consider the support test every tax year for which they wish to claim a dependency exemption.

In addition to the support test, the qualifying relative must meet the gross income test. This means the person must have gross income subject to tax that is less than $4,700 for the 2023 tax year ($5,050 for 2024).

Joint returns

If you are considering claiming your in-laws as dependents, there are several factors to take into account. Firstly, a dependent must be a qualifying child or relative who relies on you for financial support and meets specific requirements. These requirements include being a U.S. citizen, resident alien, or national, or a resident of Canada or Mexico. It is important to note that a person cannot be claimed as a dependent on more than one tax return, and they cannot claim a dependent on their own tax return.

When it comes to joint returns, there are specific considerations. If you are filing jointly with your spouse, you may be able to claim your brother-in-law as a Qualifying Child (QC) dependent if he meets the criteria. A child closely related to a taxpayer can be considered a QC regardless of their income if they are under 19, under 24 if a full-time student for at least five months of the year, or totally and permanently disabled.

Additionally, you may be able to claim your mother-in-law as a dependent on your joint return if she meets the four tests for a qualifying relative. These tests include not being a qualifying child, as she is your mother-in-law and not your child. She must also meet the Member of Household or Relationship Test, which includes specific relatives who may not live with you to meet this test. Your mother-in-law falls under this category.

It is important to note that to claim your mother-in-law as a dependent, you may need to meet the support test, which means providing over half of her financial support for the year. This includes all money spent on supporting her, such as food stamps, housing assistance, and other government assistance. Additionally, you should consider the potential impact on her federal/state benefits.

Tax credits or deductions and their impact on insurance

In the United States, there are certain conditions that must be met to claim in-laws as dependents. If your mother-in-law meets the four tests for a qualifying relative, you may claim her as a dependent on your return. These tests include not being a qualifying child, the member of household or relationship test, the gross income test, and the support test. The same rules apply to your father-in-law.

Your brother-in-law is usually your spouse's brother, meaning your spouse can claim them as a Qualifying Child (QC) dependent. If you file a joint return with your spouse, you can also claim your brother-in-law as a QC.

Now, let's discuss tax credits and deductions and how they relate to insurance. Tax credits and deductions can have a significant impact on insurance, particularly health insurance. The US government offers tax credits to encourage certain behaviours, such as purchasing health insurance. These tax credits can lower your tax liability and are often refundable, meaning you may receive a refund if your tax credits exceed your tax owed.

One example is the Premium Tax Credit (PTC), which is designed to help eligible individuals and families with low or moderate incomes afford health insurance purchased through the Health Insurance Marketplace. The PTC is based on a sliding scale, with lower-income individuals receiving larger credits to cover the cost of their insurance. When enrolling in Marketplace insurance, you can choose to have the estimated credit paid directly to your insurance company to lower your monthly premiums or receive the full benefit when filing your tax return.

Small business owners can also benefit from tax credits and deductions related to health insurance. They can deduct most of their health insurance expenses from their federal business taxes while still qualifying for tax credits to offset the cost of insuring their employees. The amount of the credit depends on the number of employees and the owner's contribution to their health insurance.

Additionally, self-employed individuals can take advantage of a unique self-employment tax deduction, allowing them to deduct 100% of their health insurance premiums up to their income level for themselves, their spouse, and any dependent children. This deduction can significantly reduce their taxable income and lower their tax liability.

Frequently asked questions