One of the most common questions that I get asked is whether or not someone can claim their partner, boyfriend, or girlfriend on their income tax returns. This is a great tax-saving strategy to consider since you can receive up to $500 in tax credits for claiming them.
Before you can claim your partner as a dependent, you will need to determine if they meet the IRS’ definition of a “qualifying relative”. There are four “tests” to determine eligibility:
- Residency
- Income
- Support
- Status
Here are the four tests to be considered a “qualifying relative”:
Did your partner live with you?
The first test that needs to be passed is the Residency test. To satisfy this requirement, your partner must be a member of your household. This means that they must have lived with you for the entire calendar year.
So does this mean you can never leave each other’s side, even for one night? Not quite! The law allows for temporary absences, like vacations, school, military service, or hospital stays. What is important is that your partner’s official residence was your home for the full year.
Did your partner earn income?
The second test relates to how much taxable income your partner earned. Taxable income includes any wages, bank interest, investment capital gains, and even unemployment benefits. The threshold for 2021 is $4,300.
This means that if your partner earned over $4,300 during 2021, you are not able to claim them as a dependent. While this amount changes (increases) almost every year, it is important to pay attention to this limit. Luckily, Social Security benefits and Economic Impact Payments (aka Stimulus Checks) are not counted towards income.
Did you financially support your partner?
The third test looks to see if you paid more than half of your partner’s living expenses during the year. In this case, living expenses include food, housing, or clothing. If your partner received money from their parents or used some of their savings, then you may not be able to claim them.
The calculation looks like this:
Amount of living expenses provided by you / Total amount of living expenses
Or if you prefer to use the official IRS worksheet, you can find that here.
Can someone else claim your partner?
The fourth and final test is whether or not your partner is being claimed by someone else. This means that you cannot claim them if they are already being claimed by their parents in the same tax year.
In the event that your partner is still legally married to someone else (and files a joint tax return), you will not be able to claim them as a dependent either.
When it comes to filing your taxes, it’s important to take advantage of all tax-saving opportunities available. If you would like to work with a financial planner to walk you through your options, I would love to help you!
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Disclaimer: This blog is for informational purposes only, and should not be considered advice or recommendations. All opinions expressed herein are solely those of Amaral Financial Planning, LLC, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made to another parties’ informational accuracy or completeness. You should consult your financial advisor, tax professional or legal counsel prior to implementation.