The IRS is continuing its taxpayer-education outreach by highlighting the credit for other dependents (ODC) in a recent press release.

The agency says this credit could be a boon for taxpayers with dependents who don’t meet the requirements for the Child Tax Credit (CTC) or Additional Child Tax Credit (ACTC).

What is the credit for other dependents?

The IRS explains that the ODC is worth up to $500 for taxpayers with dependents who aren’t eligible for the CTC or ACTC but meet the following criteria:

• Dependents who are age 17 or older.
• Dependents who have individual taxpayer identification numbers.
• Dependent parents or other qualifying relatives supported by the taxpayer.
• Dependents living with the taxpayer who aren’t related to the taxpayer.

Since income can reduce the amount of the credit, the IRS points out that single filers making $200,000 and joint filers making $400,000 trigger the phaseout.

Who can claim the credit for other dependents?

The IRS encourages taxpayers interested in claiming the ODC to become familiar with Publication 972. It provides detailed explanations for all dependent-related tax credits, including a worksheet that clients can fill out bring to your office when they’re ready to file a return.

That said, there are three rules of thumb for taxpayers to consider before claiming the ODC:

• They [can] claim the person as a dependent on [their] return.
• They cannot use the dependent to claim the child tax credit or additional child tax credit.
• The dependent is a U.S. citizen, national, or resident alien.

To help taxpayers further minimize their tax burden, the IRS also points out that “[they] can claim the credit for other dependents in addition to the child and dependent care credit and the earned income credit.”

The IRS wants eligible taxpayers to benefit from tax credits.

Despite popular caricatures, the IRS does not eagerly anticipate auditing every single taxpayer. On the contrary, easing households’ tax burden via information about available tax credits is an essential part of their mission.  

EITC Awareness Day was one of the earliest campaigns from the this filing season, and the ODC press release is their latest push to get more qualifying taxpayers to take advantage of similar tax breaks.

Source: Tax Tip 2020-27