The IRS has ruled that an individual will no be treated as the qualifying child of a person if that person doesn't make enough to file a return and either does not file a return or files a return solely to obtain a complete refund of withheld income taxes. The code provides that the term "dependent" means a "qualifying child" or a "qualifying relative." Among other requirements, a qualifying relative cannot be the qualifying child of any other taxpayer.

So, to put it into an example. Jennifer supports as members of her household an unrelated friend, Rick, and Rick's four-year-old child, Lisa. Rick has no gross income and is not required to file a return. Jennifer can claim both Rick and Lisa as qualifying relatives, provided all other requirements are met (provide more than one-half of their support, etc.).

IRS Publication 501 provides more detail if you need some lite nighttime reading.

Free, No-Obligation Consultation

I would be honored to chat with you about your accounting, tax and finances whether personal or business. I offer a Free, No-Obligation consultation (at your place or mine). During our meeting we will discuss your concerns and questions and let you know how we can help you and our costs. My consultations are not just sales pitches, I will offer you some solid ideas and solutions to help you right off the bat. To schedule a consultation at a time convenient for you, call me at any of offices or call me toll-free at (888) 758-5966 or click here to email me.

I hope you found this information useful. I am excited by the fact that my practice is growing. The key to my firm’s growth — and probably your business too — is referrals from satisfied clients, customers and friends like you. If you know of a friend, colleague or business that would like to grow with us please let me know.