Who qualifies for a dependency exemption?

The correct answer reflects the IRS criteria for dependency exemptions, which state that individuals must be closely related to the taxpayer or meet specific conditions to qualify. This includes children, stepchildren, siblings, and even some other relatives such as aunts, uncles, or parents, provided they reside with the taxpayer for a certain period and meet income thresholds. Essentially, the IRS sets clear guidelines detailing relationships, residency, and support requirements that must be satisfied for someone to be claimed as a dependent.

In contrast, while biological children can qualify, it's not restricted only to them, as mentioned in the first option. The third choice is overly broad, as financial support alone does not automatically qualify an individual; they must also meet those specific relationship and residency requirements. Lastly, the mention of spouses living outside the household does not fall under dependency exemptions since spouses file taxes jointly or separately and are not classified as dependents. Understanding the nuances of these criteria is essential for correctly determining dependency status.