Claiming your young children as dependents usually does not raise any issues with Uncle Sam. It is assumed that they live with you, are United States citizens, and don't have too much income to qualify. (In case of divorce, one parent gets the deduction, usually the one with custody.)

It's even possible to get dependency exemptions for others—parents, relatives or others, as long as you pay for most of the person's support. You can deduct medical expenses on your return for those whom you support. (Where several children support a parent, the dependency exemption can be assigned to one.)

Where it gets sticky, though, if the parent or relative you help care for has a little too much income. You'll need to document that you paid more than half the support. Also, non-citizen children of U.S. citizens can be claimed only if they live in Canada or Mexico. Ditto child-care or dependent-care credits.

For nearly 30 years, Mike Nickerson has owned and managed a small, full-service accounting practice in the Midcoast. He holds a bachelor's degree in accounting from University of Southern Main and a master's degree in financial planning from Bentley University.

He is a past board member and president of the Maine Society of Certified Public Accountants and currently serves on the Maine Board of Accountancy.

An aged rock musician, Nickerson now finds musical enjoyment playing upright and electric bass in a variety of bands spanning folk to jazz music genres. He and his wife have three grown children, and they enjoy their free time hiking, kayaking, golfing, bicycling and motorcycling.

http://www.nickersonpa.com/