Thursday, October 30, 2008

Qualifying Dependents

I was recently asked by a client whether or not they could claim their father (who is over 65) that lives with them as a dependant. The answer is yes! This client takes care of her father, who is completely dependant upon her for his care both personally and financially. This is as long as they live in the same household.

For Example:
Ms. Hernandez is 72 years old and lives in an apartment. Last year she received $3,000 in nontaxable Social Security benefits and $400 in taxable interest income, all of which was used for her support. Ms. Hernandez's daughter, Theresa, paid $4,800 during the year toward her mother's support. Total support includes taxable and nontaxable income. Ms. Hernandez's total support is $8,200 ($3,000 + $400 + $4,800). Theresa paid more than half of her mother's support ($4,800/$8,200 = 59%).

Theresa can claim a dependency exemption for Ms. Hernandez.

Secondly, client also asked whether or not they could claim their handicapped child (who is 21) as a dependant. This answer to this is yes as well. The IRS allows a taxpayer to claim a child, no matter their age as a dependent, as long as they live in the same household.

A taxpayer can also claim a child as a dependent that is under 24 years old and the taxpayer cares for over 50% their expenses. Say for instance, a child in school and does not work is allowed to be claimed a dependent because they depend on their caregiver for over half of their living expenses. However, if the child is living at home, has a job, and prov, then they pays for more than 50% of their necessary living expenses, then they are not be considered a dependent because of the amount of income they generate. They would need to file an income tax return themselves.

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