Ready to file your own taxes? If you're thinking already about the great refund that you're going to get back, you might want to hold off on that happy dance. That's because the new IRS rules are changing the way we do taxes, and only a foolish person wouldn't clue themselves in to that. If you're audited and it's found that you didn't file your return properly, you could lose that cool refund and have to pay severe penalties as well. Is there a way out of things like that? Of course there is: just having the best information possible will have you staying afloat in a pinch!
 
One of the biggest debates around centers around the idea of dependents. After all, the right combination of dependents can really shave off a lot of money from your taxes, especially if children are involved.

So, what is a dependent, really?
 
Generally speaking, a dependent is anyone that's actually related to you that also lives in the same residence. So this means that the nice roommate that decides to live with you isn't technically a dependent. Of course, many people will let you declare them as dependents on your taxes, but that isn't something that you should necessarily do. This is because they can turn around and file themselves, which would mean the IRS is going to crackdown on one of you. Since it's their right to declare themselves on their own taxes, it's highly likely that you’re going to be the one that loses in the end. Another point is support -- the dependent in question cannot make more than $3,030 every year that you claim them.

Your tax preparer will want to have the name, social security number, and date of birth for all dependents that you want to claim on your taxes. There are a lot of tax benefits associated with claiming dependents the right way.

Now, there are some exceptions to the residency rule. If you are providing more than half the support to a disabled parent, then they don’t have to live with you. This would be hard, since a lot of adult children end up having to put their elderly parents in nursing homes.


Your number of dependents also affects what type of tax return that you file. If you're just a single person with no dependents, you can file Form 1040EZ. However, most people with dependents are going to file 1040A, which is the longer form. However, this is a form that will also let you catch all of the great deductions, exemptions, and credits that usually come along with taking care of a household.

Remember that claiming your dependents is just the beginning. You will need to make sure that you're always looking at keeping good records. To avoid the chance of being nailed in an audit, you should always keep documentation for at least three years after the date that you file. You never know when this type of information will come in handy!