Pension & Benefits News IRS final regs update definition of qualifying relative
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Thursday, November 19, 2020

IRS final regs update definition of qualifying relative

By Pension and Benefits Editorial Staff

The IRS has released final regulations that clarify the definition of a “qualifying relative” for purposes of various provisions for tax years 2018 through 2025. These regulations generally affect taxpayers who claim federal income tax benefits that require a taxpayer to have a qualifying relative.

Code Sec. 152(a) generally defines a “dependent” as a “qualifying child” or a “qualifying relative.” The definition of a qualifying relative in Code Sec. 152(d)(1) includes the requirement that the individual have gross income for the calendar year that is less than the “exemption amount” as defined in Code Sec. 151(d). Section 11041(a)(2) of the Tax Cuts and Jobs Act (TCJA) added Code Sec. 151(d)(5) to provide special rules for taxable years 2018 through 2025 regarding the exemption amount. The final regulations implement changes to the law enacted in the TCJA to: (1) provide that the exemption amount, for purposes other than a deduction for a personal or dependency exemption under Code Sec. 151, is $4,150 for taxable year 2018, and for taxable years 2019 through 2025, the exemption amount, as adjusted for inflation, is the Code Sec. 152(d)(1)(B) exemption amount, as set forth in guidance published in the Internal Revenue Bulletin; and (2) describe certain payments to a payee spouse for purposes of the support test without references to repealed Code Secs. 71 and 682.

The regulations are effective on October 13, 2020. IRS Reg. §1.152-2(b) applies to taxable years beginning on or after October 13, 2020. IRS Reg. §1.152- 2(e) applies to taxable years ending after August 28, 2018.

Source: T.D. 9913, 85 FR 64383.

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