Tax season has a way of giving every adult in America heartburn simultaneously. Tax filing is just an unpleasant process, from start to finish, but it’s made even more challenging if you have unanswered questions regarding your dependents. To make matters more confusing, you might have a parent living under your roof you might qualify as one of your dependents. How should you handle it? Which decision is in the best interest of you and your parent? This guide can give you a start in the right direction.
First, What Is a Dependent?
In terms of taxes, a dependent is loosely a person who you financially support and can claim as such on your taxes. If your child is under 18, he or she is your dependent unless a split custody situation gives that benefit to the other custodial parent. It’s also possible to consider somebody a dependent if that person lives with you for the entire year or is related to you, makes less than $4,000 in gross income, and received a significant amount of support from you during the year. As long as that person is not claimed as a dependent by anybody else and will not file his own single or joint tax return, you have the ability to claim him.
When Should a Child Claim a Parent?
While it’s most common for a parent to claim a child as a dependent, once a parent becomes older and can no longer take care of himself, it becomes a realistic possibility for the roles to become reversed. Of course, there are a few important requirements to consider. First, the parent’s gross taxable income cannot exceed the personal exemption level set by the IRS, which this year is $4,000. Social Security income is treated differently and does not incur taxes until $25,000. In addition, the adult child must provide more than half of the parent’s support during the year. This means that if food, shelter, medical care, and recreation cost $18,000 per year for the parent, the child must supply more than $9,000 of that to qualify to claim the parent as a dependent.
Taxes are complicated, to be sure, so if you are still questioning your best tax filing options, speak to an elder care attorney to explore the possibilities.