Maximizing tax benefits: Understanding the credit for other dependents & how to claim it
One valuable credit that can provide relief for expats with dependents who do not qualify for the Child Tax Credit is the credit for other dependents.
In this guide, we will delve into the eligibility requirements, claiming procedures, additional considerations, and an explanation of what constitutes a dependent.
By gaining a thorough understanding of these key aspects, you can maximize your tax benefits, ensure compliance with US tax laws, and make informed decisions about your tax strategy.
Understanding the credit for other dependents
The credit for other dependents was introduced under the Tax Cuts and Jobs Act (TCJA) in 2017 as a nonrefundable tax credit.
Its purpose is to reduce a taxpayer's tax liability by up to $500 per qualifying dependent who does not meet the criteria for the Child Tax Credit. The credit is up to $500 per qualifying dependent, but it starts to phase out when your income is over $200,000 (or over $400,000 if you file married filing jointly).
What is a dependent
A dependent is an individual who meets certain criteria and qualifies for tax benefits, including the credit for other dependents.
Dependents can be classified into two categories:
- Qualifying relatives: This category includes individuals who meet specific relationship, support, and income requirements. Examples include parents, grandparents, siblings, and other family members who rely on the taxpayer for support.
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Qualifying children: This category generally refers to children who meet age, residency, relationship, and support requirements.
NOTE! Credit for other dependents specifically targets dependents who do not qualify for the Child Tax Credit, such as those over the age of 17.
Eligibility and claiming the credit for other dependents
So, next up - who qualifies for the credit for other dependents?
To claim it, certain criteria must be met:
- The dependent must be a US citizen, resident alien, or national.
- The dependent must not qualify for the Child Tax Credit.
- The dependent must meet the requirements to be considered a qualifying relative or qualifying child based on specific tests and guidelines provided by the IRS.
Gathering necessary information
When you file, you’ll need each dependent’s full name, TIN (SSN, ITIN, or ATIN), and relationship to you. For this credit, an ITIN or ATIN can work - an SSN isn’t always required.
Filing options
To claim the credit for other dependents, you can use IRS Form 1040 or appropriate tax software.
However, if you have complex tax situations or are unsure about your eligibility, seeking guidance from a qualified tax professional is recommended.
Calculating and reporting the credit
Follow the instructions provided with your tax forms or software to accurately calculate the credit. Once calculated, enter the credit amount on the designated line of your tax return, ensuring completeness and accuracy in reporting.
How to claim the Credit for Other Dependents on Schedule 8812
If you’re claiming the Credit for Other Dependents (ODC), you’ll figure it through Schedule 8812 and then bring the result onto your Form 1040.
1. List your dependents on Form 1040 first
Before Schedule 8812 can work, your return needs to show who you’re claiming as dependents (name + TIN like SSN/ITIN/ATIN). If the person isn’t listed as your dependent on the return, you generally can’t get the credit.
2. Use Schedule 8812 to calculate your credits
Schedule 8812 is where you calculate:
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the Child Tax Credit (for qualifying children under 17), and
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the Credit for Other Dependents (up to $500 per qualifying dependent who doesn’t qualify you for the Child Tax Credit - like an older child, a parent you support, or another qualifying relative).
3. Follow the prompts to separate “child” vs “other” dependents
On Schedule 8812, you’ll count:
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how many dependents qualify for the Child Tax Credit, and
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how many qualify for the Credit for Other Dependents.
Then the form applies the rules automatically, including the income phaseout (it starts phasing out above certain income levels).
4. Schedule 8812 tells you what goes on Form 1040
Once you finish Schedule 8812:
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the form will give you the final credit amount you can claim, and
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you’ll transfer that number to Form 1040 where it belongs (the credits section).
5. Double-check two common “gotchas” before filing
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TIN required: each dependent needs a valid SSN/ITIN/ATIN on your return.
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Not refundable: the Credit for Other Dependents can lower your tax bill, but it generally won’t create a refund by itself if you don’t owe tax.
Additional considerations for US expats
Foreign tax credits
US expats who pay taxes to a foreign country on their foreign-sourced income may also be eligible for Foreign Tax Credits. Understanding how the Foreign Tax Credit interacts with the credit for other dependents is crucial to optimize your overall tax position.
Consulting with a tax professional experienced in international tax matters can help you navigate this complex area.
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Residency and physical presence tests
For US expats, this credit works the same way as it does for taxpayers living in the US: you can claim it if you have a qualifying dependent on your return and that person doesn’t qualify you for the Child Tax Credit. It does not depend on foreign residency/physical-presence tests.
Keeping accurate records
Maintaining comprehensive and accurate records is vital for expats.
This includes documents supporting your dependent's relationship to you, proof of financial support, and any other relevant documents that establish their status as a qualifying relative or qualifying child.
Adequate record-keeping helps support your tax claims and ensures compliance with IRS regulations.
Bottom Line
Understanding the credit for other dependents is essential for US expats with dependents who do not qualify for the Child Tax Credit.
By familiarizing yourself with the eligibility requirements, claiming procedures, additional considerations, and the definition of a dependent, you can maximize your tax benefits and navigate the complexities of US tax laws.
Remember, seeking guidance from a qualified tax pro who specializes in international taxation can provide tailored advice and ensure compliance with the ever-changing tax landscape.
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FAQ
The Child Tax Credit is for taxpayers with qualifying children under 17, offering up to $2,000 per child.
The credit for other dependents covers dependents not eligible for the Child Tax Credit, like older children or qualifying relatives, providing up to $500 per dependent.
You can claim the credit for other dependents for an unlimited number of qualifying dependents, with a credit limit of $500 per dependent.
On Form W-4, other dependents’ is part of Step 3. You multiply the number of other dependents by $500 (and qualifying children under 17 by $2,200) to help your employer estimate how much federal tax to withhold.
Yes. Adults can be your dependent (and potentially qualify you for the $500 credit) if they meet the IRS tests for a qualifying relativemost importantly, you generally provide more than half their support, and their gross income is below the annual limit (for tax year 2025, that limit is $5,200).
You generally can’t claim someone as a dependent if they don’t meet the IRS dependency tests (relationship/residency/support/income rules), if they’re claimed by someone else, or if they file a joint return (with limited exceptions). Also, a dependent generally must be a US citizen, US national, US resident alien, or a resident of Canada or Mexico (with an exception for certain adopted children).
