Tax Terms You Need to Know - Dependents

Video Transcript

Hey, this is Chris with Money Burst, and I'm back with the next video in our tax term series - a new series where I hopefully help you feel a little more comfortable taking on your taxes this year. Today, let's talk about dependents.

Now a dependent is someone that you financially support. Typically, it's your children or other qualifying eligible adults. Now you can't just claim anyone as a dependent just because you want to. There are certain specific definitions of what makes someone a dependent. The key one that you want to look for, or follow in the situation, would be whether or not you're providing more than half of the total financial support during that calendar year for this particular person. If that does not match what you're talking about when you refer to this person you want to claim as a dependent, I'd be very cautious and definitely check with your accountant because you want to make sure they actually qualify before you start throwing them onto your tax return.

One of the benefits of including or claiming a dependent on your tax return is that it makes you eligible for additional tax deductions and credits. So, things like the earned income tax credit, or the child tax credit that you'll become eligible for in certain situations when you have these dependents on your tax return.

But I cannot stress this enough: just make sure you check with your accountant before you start adding people onto your tax return because they do need to be eligible dependents.