3 pages+federal accounting

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SUBJECT: Dependent on a Tax Return

The marketplace application requests for the number of dependents that a candidate will claim for the purpose of the tax. This information assists in establishing the family size and whose income to include in defining the Modified Adjusted Gross Income (MAGI) for the household. There different tests that ought to be met to claim somebody as a dependent. Once the tests are met, the potential dependent has to fulfill additional criteria to be either a Qualifying Relative or Qualifying Child. For the determination of the health care affordability plans, it is not compulsory to determine the category of dependency of an individual, but it may be important to appreciate the regulations for dependency to assist an applicant who is projecting the household size (Spilker et al., 2014).

Rules for Claiming a Qualifying Child

A Qualifying Child needs to be related to the taxpayer through fostering, blood, adoption or born to his or her spouse. In some instances, the qualifying child can be a brother or relative of the taxpayer. The only difference is that the child has to have the minority age in order for him or her to be considered. In order for a child to qualify, he or she must be below 19 years and younger than the tax payer. The qualifying child has to be living with the taxpayer for at least half a year. The time when the child is away from the parent’s residence for a short period is also deemed to be sustained residence. Hence if the child has been away for college or any education related engagement, the period will be counted when calculating the threshold. The child has to be reliant on the parents for over half of his upkeep. The common approach when dealing with the above cases is to give priority to parent’s claim of dependency. However, other relatives can claim the child making him or her also covered by the qualifying relative clause.

Qualifying Relative

A Qualifying Relative is an individual who meets the IRS prerequisites to be one’s  dependent  for tax plans and returns. The above distinction arises in terms of age and the dependency. If the relative is not deemed as a minor or is not unable to meet his or her daily upkeep, he is not qualified to be considered as a child. The law increases the duration of living together with the taxpayer. Contrary to the qualifying child, qualifying relatives have to live with the taxpayer for over one year and indicate total dependency on the taxpayer. Blood or other legally recognized relations do not count when determining if the individual is qualifies or not. Contrary to the qualifying child, the dependent has to be earning a gross income stipulated by the law. As of 2014, the income was $3,950. The law also applies the same rule in terms of the support. The qualifying relative has to rely on the parent for over half of his or her upkeep.

The Difficulty of Projecting Tax Dependency

It is vital to know the applicant’s dependents since this will determine who is in the applicant’s family, and the poverty level income of the applicant poverty so as to determine premium tax credit eligibility and Medicaid.

In conclusion, there are some similarities and differences between the qualifying child and relative. The qualifying child shares similarities with the qualifying relative in that the child has to be dependent on the taxpayer for over half of his or her upkeep and they can be related to the taxpayer. However, a qualifying relative does not have to be related to the taxpayer based on the common legal requirements. The qualifying relative has to be dependent for a longer period compared to the qualifying relative.

Work cited

Spilker, B.C., Ayers, B. C., Robinson, J. R., Outslay, E., Worsham, R. G., Barrick, J. A.,

Weaver, C. (2014). 5th Ed. McGraw-Hill’s.