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Guidance on Qualifying Relative and the Exemption Amount

Notice 2018-70

SECTION 1. PURPOSE The Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) intend to issue proposed regulations clarifying the definition of “qualifying relative” in § 152(d) for purposes of various provisions of the Internal Revenue Code (Code), including the new $500 credit for other dependents under § 24(h)(4) and head of household filing status under § 2(b), for taxable years in which the § 151(d) exemption amount is zero. SECTION 2. BACKGROUND In general, § 151(a) of the Code allows a taxpayer to claim deductions for exemptions for the taxpayer and his or her spouse (§ 151(b)), and for any dependents (§ 151(c)). Before amendment by “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,” Pub. L. No. 115-97 (Act), § 151(d) provided for an exemption amount of a base dollar amount that was adjusted for inflation. Before the Act, the exemption amount for 2018 was calculated to be $4,150. See Rev. Proc. 2017-58, 2017-45 I.R.B. 489, modified and superseded by Rev. Proc. 2018-18, 2018-10 I.R.B. 392.

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Page 1

Official source

Guidance on Qualifying Relative and the Exemption Amount

Notice 2018-70

SECTION 1. PURPOSE The Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) intend to issue proposed regulations clarifying the definition of “qualifying relative” in § 152(d) for purposes of various provisions of the Internal Revenue Code (Code), including the new $500 credit for other dependents under § 24(h)(4) and head of household filing status under § 2(b), for taxable years in which the § 151(d) exemption amount is zero. SECTION 2. BACKGROUND In general, § 151(a) of the Code allows a taxpayer to claim deductions for exemptions for the taxpayer and his or her spouse (§ 151(b)), and for any dependents (§ 151(c)). Before amendment by “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,” Pub. L. No. 115-97 (Act), § 151(d) provided for an exemption amount of a base dollar amount that was adjusted for inflation. Before the Act, the exemption amount for 2018 was calculated to be $4,150. See Rev. Proc. 2017-58, 2017-45 I.R.B. 489, modified and superseded by Rev. Proc. 2018-18, 2018-10 I.R.B. 392.