• Even though dependents are claimed as such, income taxes still apply to them.calculator image by dinostock from Fotolia.com
  
  Sometimes claiming a dependent is a matter-of-fact tax issue, which usually occurs when the dependent doesn’t work and has no income to create confusion about your tax situation. When your dependent is working or has other income, however, certain tax laws are applicable and may affect how you and your dependents file taxes.
  
  

Definition of a Dependent

• A dependent is any child, sibling or other blood relation who lives with you that you financially and materially support. Generally, the term is applied to children under the age of 19, but students enrolled in college up to the age of 24 may also be claimed. If you’re supporting a disabled relative you can claim him as well. A dependent is someone who meets these conditions and receives more than half of his financial support from you—he can be employed but must be earning less than a minimum amount determined by the IRS.
  
  

Dependent Exemption

• In the 2009 and 2010 tax years, a tax exemption of $3,650 was received for each qualifying dependent. This is an exemption and not a credit, however, and won’t apply toward your rebate if you are entitled to one.
  
  

Dependents' Income Tax

• Your dependent may have to pay income tax on her earnings even though you claim her on your return. For the tax year 2010, dependents who are under the age of 24 and single must file income taxes if their unearned income exceeded $950 for the year or their earned income exceeds $5,700 for the year. If their gross income exceeds $950, or if it is $300 more than their earned income, they also must file. Seniors or disabled persons claimed as dependents must file if their unearned income exceeds $2,350 (or $3,750 if 65 and older and blind) or their earned income is more than $7,100 (or $8,500 if older than 65 and blind).
  
  

Other Situations when Dependents Should File

• Just because your dependent doesn’t meet minimum earning requirements doesn’t mean he should not file by rule. Dependents with income from jobs that withheld income taxes may be entitled to a rebate for overpayment at the end of the year. Calculate your dependents’ taxes and file if they receive a rebate, even if their earnings are below minimum taxable standards.