Definition of a Dependent

• A dependent refers to anyone who the taxpayer cared for financially throughout the year. Financial support includes the cost of shelter, clothing, food, education or medical expenses. The dependent is unable to pay these expenses himself and relies on the taxpayer.
  
  

Tests

• To qualify as a dependent, the dependent must meet four tests. These include the relationship test, the residence test, the age test and the support test. To pass the relationship test, the dependent must be the taxpayer's child, foster child or one of their children. To pass the residence test, the dependent must live with the taxpayer for most of the year. To pass the support test, the taxpayer must provide more than half of the dependent's support throughout the year. The dependent must also be younger than 19 years old unless the dependent is disabled or attending school full-time.
  
  

Reasons To Claim

• Several reasons exist for taxpayers to claim each qualified dependent. The IRS offers several tax exemptions, tax deductions and tax credits which provide financial support for the taxpayer. Exemptions reduce the individual's taxable income. The taxpayer receives one exemption for each dependent she claims. Tax deductions include student loan interest for dependents. Tax credits include the dependent care credit and the child credit. Each exemption, deduction and credit reduces the total tax liability of the taxpayer.
  
  

Limit

• No legal limit exists regarding how many dependents a taxpayer can claim. The taxpayer should claim as many dependents as he qualifies for in order to reduce his tax liability. At some point, the taxpayer will receive no benefit from claiming additional dependents. This depends on his personal income and the impact each exemption, deduction and credit makes on his tax liability. As his personal income decreases, the benefit he receives from claiming additional dependents decreases also.