Exemptions—Comprehensive Example

Ken J. and Brandi L. Lyons are married, live in California, and file a joint return. They have two children, Jocelyn 10 and Libby 12, who lived with them the entire year. The Lyonses were the sole supporters of their children. Neither child had any income during the year. In addition, Brandi's cousin Richard Hayes lived with the Lyonses for the entire year. Richard earned $400 mowing lawns. The Lyonses provided more than half of Richard's support. The Lyonses are not claimed dependents on anyone else's return.

The Lyonses can claim five exemptions:

• two personal exemptions (one for Ken and one for Brandi)
• three dependency exemptions (one each for Jocelyn, Libby, and Richard)

Dependency Tests for the Lyonses

Exemptions for Dependents
	Qualifying Child	Qualifying Relative
1. Dependent taxpayer test	Jocelyn and Libby cannot claim self or anyone else	Richard cannot claim self or anyone else
2. Joint return test	Not married and do not file returns	Not married and does not file a return
3. Citizen or resident test	Citizen	Citizen

Remember the definition of a dependent. A dependent is a qualifying child or qualifying relative who must meet additional tests.

Qualifying Child
	Definition	How do Jocelyn and Libby qualify?
1. Relationship test	The child must be your child, step child, foster child, sibling, half sibling, stepsibling, or a descendant of any of them.	They are the daughters.
2. Age test	The child must be (a) under age 19 at the end of the year and younger than you (or your spouse if filing jointly), (b) a full-time student under age 24 at the end of the year and younger than you (or your spouse if filing jointly), (c) any age if permanently and totally disabled.	They are under 19, ages 10 and 12.
3. Residency test	The child must have lived with you for more than half of the year.	They lived with parents the entire year which is more than half.
4. Support test, and	The child must not have provided more than half of his or her own support for the year.	They did not provide more than half of their own support.
5. Special rules for qualifying child of more than one person.	If the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child.	No one else can claim them.

Qualifying Relative
	Definition	How does Richard qualify?
1. Not a qualifying child test	The person cannot be your qualifying child or the qualifying child of anyone else.	He is a cousin, so he is not a qualifying child.
2. Member of household or relationship test	The person either (a) must be related to you in one of the ways listed under Relatives who do not have to live with you, or (b) must live with you all year as a member of your household.	He lived with them the entire year.
3. Gross income test, and	The person's gross income for the year must be less than the threshold amount for the current tax year.	He earned only $400.
4. Support test	You must provide more than half of the person's total support for the year.	They provided more than half of Richard's support.