To qualify as a dependent for tax purposes, an individual must either qualify as a "qualifying child" or "qualifying relative."
In order for an individual to be considered a “qualifying child,” an individual must:
- Be a “child” of the taxpayer (son, daughter, grandchild, niece, nephew, brother, sister);
- Not provide over half of his/her own support;
- For the Healthcare FSA, be under the age of 19 (or 24 if a full-time student);
- For the Dependent Care FSA, be under the age of 13 unless permanently and totally disabled; and
- Have the same principal residence as the taxpayer for more than half of the year (temporary absences due to illness, education, business, vacation, or military service do not disqualify the child).
In order for an individual to be considered a “qualifying relative,” he or she must:
- Be a blood relative or reside with the taxpayer if not a blood relative;
- Receive over half of his/her support from the taxpayer;
- Be a U.S. citizen or national or a resident of the United
- For the Dependent Care FSA only, not have income equal to or in excess of the Federal exemption amount for that tax year and cannot be claimed as a “qualifying child” by any other taxpayer.
Note: There is still an exception for health expenses incurred for a child of divorced parents. As long as one parent can claim the child as a dependent, the healthcare expenses incurred by the participant qualify under the Healthcare FSA, regardless of residency.
The expenses of a participant's spouse qualify for reimbursement under the HCFSA. The IRS does NOT recognize a same sex spouse (qualified domestic partner) for tax purposes. Qualified Domestic Partners may not file a joint tax return and expenses of a Qualified Domestic Partner do NOT generally qualify for the HCFSA unless they qualify as a dependent under the definition of a "qualifying relative."