The Credit for Other Dependents, introduced under the Tax Cuts and Jobs Act in 2018, provides a $500 non-refundable credit for each qualifying dependent who doesn’t meet the criteria for the Child Tax Credit.
It seeks to offer a tax break to those taxpayers with dependents who do not meet the requirements of the Child Tax Credit. This depends, however, on the following:
- If the dependent is 17 years or older
- Adult dependents (24 years for full time students and no age limitations for permanently disabled children)
- The eligible dependents shall, however, posses an ITIN
Eligibility requirement for the COD
The eligibility requirement for taking the Credit for Other Dependents includes:
- The dependent must be a U.S. citizen, U.S. national, or U.S. resident alien.
- The dependent cannot be eligible for the Child Tax Credit.
- The dependent must either be defined as a qualifying relative or qualifying child of the taxpayer, according to the IRS.
- The COD cannot offer more than half of their support requirement within one year of tax return.
- The COD cannot file the income tax return jointly with a spouse but except in those cases and COD not claimed as a dependent of someone else income tax return.
Who is eligible for the COD?
It should be noted that the Credit for Other Dependents can be claimed with an unlimited number of dependents, but the credit for this one is capped at $500 per dependent. These would include:
- Children above 17 years
- Parents/grandparents
- Siblings and other relatives reliant on the taxpayer.
- Every other person qualifying under the IRS’ relationship, residency, support, and income requirements
But there are some who are excluded from availing themselves of the COD :
Exceptions
- Dependents filing a joint return with certain exceptions
- Nonresident aliens of the United States
- Married persons filing separately; however, with a few conditions when claimed as a dependent by another person
The taxpayer needs to report the following information for each dependent for which it is filing the Credit for Other Dependents on their return:
- Name of the dependent, social security number SSN, or Individual Taxpayer Identification Number ITIN and relation with the taxpayer.
- Proof that the dependent is a dependent, including proof that he provided more than half of the dependent’s support.
- Taxpayers must have an accurate and valid identification number (either SSN, ATIN or ITIN) for themselves, spouse if filing jointly, and each dependent by the original due date of the return, including extensions.
Benefits of Credit for Other Dependents
The Credit for Other Dependents gives huge tax benefits to taxpayers who otherwise have dependents that are not internally fit in the eligibility of the Child Tax Credit. With knowledge of the requirements and the type of person eligible for the COD, a taxpayer should be in a position to optimize tax benefits and work within the confinements of U.S. tax laws. The credit is also $500 per qualifying child as long as your Adjusted Gross Income (AGI) does not exceed $200,000 and $400,000 if you are filing jointly.
It should be noted further that the COD is a nonrefundable credit, whereby it could only credit one’s tax. The credit to the extent that it is more than the tax is not refunded.
