Relationship or Member of Household Test
The relationship or member of household test determines if a potential dependent's place of residence allows them to qualify for dependency status in the eyes of the IRS.
To meet this test, an individual must live with the taxpayer all year or be related to the taxpayer.
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Relative – The following are treated as related persons:
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Taxpayer’s child, stepchild, foster child, or a descendant of any of them (for example, a grandchild). A legally adopted child is considered the taxpayer’s child.
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Taxpayer’s brother, sister, half-brother, half-sister, stepbrother, or stepsister.
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Taxpayer’s father, mother, grandparent, or other direct ancestor, but not foster parent.
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Taxpayer’s stepfather or stepmother.
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Son or daughter of taxpayer’s brother or sister.
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Son or daughter of taxpayer’s half-brother or half-sister.
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Brother or sister of taxpayer’s father or mother.
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Taxpayer’s son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.
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Notes – (1) a relationship established by marriage is not ended by death or divorce (Reg § 1.152-2(d)) and (2) a related person who died during the year will meet the relationship test.
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Unrelated Individuals - must live with the taxpayer all year to qualify as dependents under this test., But keep the following special rules in mind:
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Temporary absences from home, such as for school or for care in a nursing home don’t count as time living out of the home.
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An unrelated person can also qualify under this test in the year of birth or death provided the person always lived with the taxpayer during that year prior to death or after birth.
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Those “foster” relationships excluded under the qualifying relative test can qualify under this test.
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A person will not be counted as a member of the taxpayer’s household if the relationship of that person to the taxpayer is in violation of local law.
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Although cousins, great-nieces/nephews, and wife or husband of uncles or aunts do not qualify under the relationship test, they could all qualify if they lived with a taxpayer all year.
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Even if eligible to be the taxpayer’s dependent, an unrelated person cannot qualify the taxpayer for the Head of Household filing status.
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Domestic Partner as Member of Taxpayer's Household - Unless the domestic partner meets one of the relationship tests, he or she must be a member of the taxpayer's household as defined for “unrelated person” above (Code Sec. 152(d)(2)(H)) to qualify as the taxpayer's dependent. The same rule applies with respect to the domestic partner's children. Thus, an unmarried taxpayer couldn't claim as his dependents the children of a woman he lived with, where the woman and her children (who weren't his adopted or fosterchildren) left in the latter part of the year and weren't members of his household for the entire year.
Relationship in Violation of Local Law - Under the member-of-household requirement, an individual qualifies as a dependent if the individual is a member of the taxpayer's household for the entire tax year. However, if at any time during the taxpayer's tax year, the relationship between that individual and the taxpayer “is in violation of local law,” the individual won't be a member of the taxpayer's household. (IRC Sec. 152(f)(3); Reg § 1.152-1(b)) This day and age it would be extremely rare to encounter such laws.