This time of year, everyone's looking for ways to reduce their taxes. Claiming dependents is a great way to get more personal exemptions and cut your taxable income by as much as $3,900. But who qualifies as a dependent?
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, goes through what it takes to claim a dependent on your taxes. Dan notes that children age 18 or younger, or full-time students up to age 23, are the most typical dependents, with the requirement that the child live with you for more than half the year and that you provide half the child's financial support. But Dan also notes that other people can count if they live with you or if they are sufficiently close relatives, including parents, grandparents, uncles and aunts, or in-laws. However, their gross income has to be less than $3,900 and you must provide more than half of their financial support. With the tax deduction worth as much as $1,500 to some taxpayers, it's worth looking into whether you're claiming all the dependents to whom you're entitled.