Including dependents on the IRS is one way to get tax benefits. But do you know who can or cannot be considered dependent?
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Did you know that, for IRS purposes, a dependent child does not have to be a minor? Yes, there are other conditions that define who is or is not considered dependents on the IRS.
In addition, there are several family formats, each with its composition, number of members and different types of connection (not necessarily blood ties).
With regard to the IRS, the law contemplates four types of households with dependents: spouses or de facto partners and their dependents; separated, widowed or divorced and their dependents; single father or mother and dependent dependents; single adopter and dependents under his care.
But the most frequent doubt is related to age. How long are you considered dependent? And if the son already works, can he enter the parent s’ IRS statement? Let’s see next what the IRS Code says in this regard.
Who are considered dependents on the IRS?
As defined in paragraph 5 of the Article 13 of the IRS Codeare considered dependent:
- Children, adopted children and minor stepchildren who are not emancipated or under guardianship;
- Children, adopted and stepchildren, adults, as well as those who, up to the age of majority, were subject to the guardianship of any of the subjects responsible for managing the household, who are not over 25 years old and do not earn more than 14 minimum wages annually. That is, 9870 euros (705 euros x 14 months) in the 2022 IRS, to be paid in 2023;
- Children, adopted, stepchildren and those subject to guardianship, older, unfit for work and to raise means of subsistence;
- Civilian godchildren.
Who aren’t?
For IRS purposes, the following are not considered dependents:
- Emancipated minors;
- Children, adopted and stepchildren who have turned 26 by December 31, 2022;
- Children, adopted children and stepchildren who, reaching the age of majority – that is, 18 years old – receive more than 14 minimum wages.
How many households can a dependent belong to?
Dependents cannot be part of more than one household at the same time. However, in situations where parents do not live together, the rule is adjusted to different realities.
According to number 9 of article 13 of the IRS Code, in the event of divorce or separation with joint custody, the dependents become part of:
1. The taxable person’s household corresponding to the residence determined within the scope of the regulation of the exercise of parental responsibilities;
two. The household of the taxable person with whom the dependent has tax domicile on the last day of the year to which the tax relates, when, within the scope of the regulation of the exercise of parental responsibilities, his residence has not been determined or it is not possible to determine your usual residence.
In the event that dependent children are included in a joint custody regime, they can be included in the IRS of both parents, for the purposes of imputing their own income and expenses.
In these situations, expenses must be divided by 50% or according to the percentages established in the Parental Responsibility Agreement.
What are the deductible expenses with descendants in the IRS?
According to Article 78.º-A of the IRS Code, it is possible to deduct a lump sum for each dependent. In the 2022 IRS, due in 2023, this fixed deduction corresponds to:
- 600 euros, if the dependent is over three years old;
- 726 euros (600 euros plus a “bonus” of 126 euros), if the dependent is three years old or less, until December 31 of the year to which the tax relates.
If there are more dependents in the same household, the deduction for each child up to three years old is higher:
- 900 euros (600 euros plus a “bonus” of 300 euros) for the second and subsequent dependents, regardless of the age of the first.
If a couple opts for joint taxation, the amounts referred to are those that will have to be deducted. In the case of separate taxation, each member of the couple can deduct half of these amounts. The same happens in the case of separated parents with joint custody, provided that the children are in an alternate residence situation, established in an agreement regulating the exercise of parental responsibilities.
In addition to these fixed deductions, other expenses of dependents may also be deducted from the IRS, namely through deductions for the collection of health, education and VAT deduction for invoice requirements.
How to associate dependents to the household?
Ensuring that the information that Finance has about you is correct is, in addition to your obligation, a way to avoid unpleasantness when submitting the IRS declaration.
For this reason, whenever there are changes to your household, you must update this information on the Finance Portal. As a rule, this communication must be made by the February 15 of the following year with regard to the tax. This is also how the Tax Authority finds out who are the dependents that are included in your household.
To do so, just follow these steps:
1. Enter the option “Finanças – Access tax services” and click on “Services”;
two. In the option “Personal data relevant to the IRS declaration”, select “Communicate household”;
3. Enter your NIF and your password to access the Finance Portal;
4. Authenticate all household elements that existed up to the date of December 31 of the year to which the tax relates, placing the respective access passwords to the Finance Portal;
5. Indicate the type of dependency (“Civil godchild”, “Dependent” or “Dependent in joint custody”). If you tick “Dependant in joint custody”, you must also indicate who exercises parental responsibilities, the NIF of the person with whom you share joint custody, which household includes the dependent, the percentage of shared expenses and if there is alternate residence;
6. Click on “Close edit mode” and proceed to “Next”;
7. Update the household’s permanent home (the requested data is contained in the property booklet, which is accessible on the Finance Portal) and click on the “Submit” button.
What if the household has not been communicated within the due period?
If you did not do so within the prescribed period, you can still add or remove descendants of the household in the income tax return, at the time of delivery of the IRS.
Bear in mind, however, that it is not possible to do it in the Automatic IRS. Whoever is covered by the Automatic IRS and needs to add/remove dependents, must dispense with this automatism and submit the IRS in the normal way, that is, through Model 3.
In the case of children in joint custody with alternate residence, this change may not be possible, even in the IRS declaration manually.
If you have not confirmed the household in time or if there is a difference between the information communicated by each of the parental guardians, when completing the declaration in the normal terms, the system may, even so, not allow you to place the dependent with alternate residence and percentage of shared expenses other than 50%. In this case, you will then have to submit a graceful claim to AT.
Article originally published in July 2019. Last updated in January 2023.
