As you probably might know, a roommate is someone you share a living space with, as well as expenses such as rent and utilities. This may be a person you already know or someone you encountered on a roommate finder website. A basic definition of a household member is someone who can be claimed as a dependent when it comes to matters that involve tax, so since you share a home with a roommate, does that automatically mean that they can be claimed as a dependent?
Is a roommate considered a household member? A roommate cannot be considered to be a household member unless you are married to them or they are a tax dependent. If your domestic partner is your roommate and you share a child with them or you claim them as a tax dependent, they can also be considered to be a member of your household.
In some cases, you may be able to claim a boyfriend, girlfriend, or even a friend you are living with as a dependent, but they have to be a member of your household for the whole year as well as meet the criteria put in place by the IRS.
Who is considered a member of the household?
In order for someone to be considered a member of the household, the person should fall in at least one of the following categories:
- A direct descendant (child, grandchild), or step-lineal descendant (stepchildren)
- A brother or sister, including half-brothers/sisters and stepbrothers/sisters
- A parent, grandparent, or great-grandparent
- An aunt, uncle, nephew, or niece
- An in-law
- Anyone who is neither married to you nor related to you but still lives with you for the whole year
A roommate may be considered in the last category, but in order for him/her to be considered a household member, there are criteria outlined by the IRS that need to be met.
For beginners, your roommate cannot be claimed as a dependent if they meet the criteria to be claimed as a dependent by another person. For example, if your roommate’s parents could claim him/her, then you cannot do the same. If your roommate has a spouse, then they cannot be filing a joint tax return if you want to claim them. In addition to this, your roommate must also be a citizen of the United States, a U.S resident, a U.S national, or a resident of Mexico or Canada. If your roommate meets these requirements, then he/she can be subjected to a series of tests in order for you to be able to claim them as a dependent.
- He or she should not be a “qualifying child” of a taxpayer – There are rules put in place by the IRS for a qualifying child based on age, relationship, residency, and joint return. This simply means that you cannot claim your roommate if someone else could.
- Gross yearly income – In order for a roommate to qualify, he/she cannot earn a gross yearly income that surpasses $4,150 in the 2018 tax year. This amount usually changes on a yearly basis.
- Provision of support – You must provide more than half of the support for your roommate. This should last for the whole year.
- Living together – Your roommate should live with you the entire year as a member of your household in order for you to claim him/her as a dependent. However, there are some allowances for not being present in the household during the year. These allowances include being absent from the household because of being away for school, illness, going on a vacation, being away to attend to work-related issues, or attending to military service duties.
All in all, your relationship with your roommate cannot violate the local law if you intend to claim him/her as a dependent. For instance, if your roommate is married to someone else, you can’t claim him/her as a dependent especially if the state you reside in does not permit co-habiting with a married person. In this case, your roommate is not considered a member of your household.
If two or more people claim the same person, in this case, your roommate, as a dependent, then the IRS will use the previously mentioned rules to settle who has the legitimate claim. Keep in mind that the IRS will inexorably audit tax returns when more than one person tries to claim the same dependent.
Process of claiming your roommate as a dependent
- File your income taxes using either Form 1040 or Form 1040A.
- Provide the full names of your roommate(s), their social security numbers, and indicate the nature of your relationship. If you have more than four roommates who qualify to be your dependents, ensure that you check the right box and provide their information on another page.
- Since you can claim a fixed amount or an exemption that is subject to change every tax year for each dependent, multiply this figure by the number of exemptions you can take and provide the total number you get on the second page of your tax return.
The tax benefits of claiming your roommate as a dependent
- You could potentially save thousands of dollars in taxes if your roommate qualifies as a member of your household. For the tax years preceding 2018, for every dependent you claim, you lower your taxable income by an amount that is equal to $4,050 in 2017. This can result in substantial savings on your taxes
- You could be potentially eligible for certain tax credits.
Now that you have some more information regarding who you can claim as your dependent and whether or not your roommate can be a member of your household, you may find that you can get a larger tax refund with the help of your roommate who constantly falls behind on rent. However, before you go ahead and claim them as a dependent, make sure that you are eligible. Have all the documents that support your claim ready, and double check the rules for the tax credits you intend to claim to see if there are differences in the qualifying rules.