I’m running my small consulting business and recently became the sole provider for my younger sibling after our parents passed. I heard that claiming someone as a dependent can lower taxes, but I’m not sure how it actually works or what the rules are. Can this really help with my tax situation?
Answer by: abdullah-al-naim
2 weeks ago
Yes, claiming dependents can absolutely help lower your tax liability; sometimes by a few hundred, sometimes by a few thousand dollars, depending on your situation.
Here’s how it works in plain terms:
* When you claim a dependent, the IRS allows you to qualify for certain credits and deductions that reduce how much tax you owe.
* If your sibling qualifies, you may be eligible for the Credit for Other Dependents, worth up to $500.
* And if the dependent is your child under 17, you could qualify for the Child Tax Credit, which is much higher, up to $2,000 per child (partially refundable).
* You may also qualify for Head of Household filing status, which comes with a larger standard deduction and better tax brackets.
But it’s not automatic. To claim someone:
* They need to live with you for over half the year.
* You must provide more than half of their financial support.
* They must meet the IRS’s relationship and income rules.
So yes, it’s a legit way to reduce taxes, but you need to check the boxes properly.
If taxes make your head spin (you’re not the only one), Business Globalizer can walk you through the steps. Whether it’s understanding deductions or setting up proper filings for your business structure, we’ve got folks who do this every day.
