One key factor in determining whether you qualify for bankruptcy is determining your family size. The bigger your family size the higher the median family income number you have to be under in order to qualify for bankruptcy. For example, if you are single, your yearly income must be below $46,485. If you have one dependent, though, your yearly income must be below 58,109.00. This make a BIG difference in many people whether they qualify for a chapter 7 bankruptcy. So what does qualify as a dependent? Does your 25 year old son who lives in the house count? What if he lived out of the house?
According to the Office of the US Trustee, a dependent is a “qualifying child” or “qualifying relative” (See IRS Publication 501).
Tests To Be a Qualifying Child:
1. The child should be your daughter, son, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, stepchild, or a descendant of one of them.
2. The child should be (1) under age 19 at the end of the year (2) under age 24 at the end of the year AND a full-time student, or (3) any age if totally and permanently disabled.
3. The child must have lived with you for more than 1/2 of the year.
4. The child must not have provided for themselves more than 1/2 of their own support for the year.
5. If the child meets the above, you must be entitled to claim the child as a qualifying child.
Test to be “Qualifying Relative:
1, The person cannot be your qualifying child or the qualifying child of any other taxpayer
2. Person must either (a) be related to you in one of the ways listed under Relatives who do not have to live with you, or (b) must live with you all year round as a member of your home (and your relationship cannot violate local law).
3. Person’s gross income for the year must be less than $3500
4, You must provide for more than 1/2 of the person’s total support for the year.