Most of us are familiar with claiming our children as dependents for federal income tax purposes. However under some circumstances you can claim your parents or other qualifying relatives as dependents.
Why should I claim my parent as a Dependent?
The recent changes to the tax laws took away the personal exemption for each dependent that we were used to. For tax years 2019 through 2025 there are no personal exemptions. What we have instead are an increased standard deduction and certain tax credits. One reason to claim a parent is to get an increased standard deduction. A single person who might not otherwise qualify for a head of household standard deduction can qualify if a parent can be claimed as a dependent. Perhaps the best reason to claim a parent as a dependent is to qualify for the dependent care tax credit and the credit for other dependents. Unlike deductions which reduce your income for tax purposes, credits offset taxes owed.
Does my parent have to live with me for me to claim her as a dependent?
No. If the person you seek to claim as a dependent doesn’t live with you all year as a member of your household, then they still can qualify as a dependent if they are one of the “Relatives who don’t have to live with you.” This includes:
- Your father, mother, grandparent, or other direct ancestor, but not foster parent.
- Your stepfather or stepmother
- A brother or sister of your father or mother.
- Your father-in-law or mother-in-law.
- Many other relatives and in laws (See IRS publication 501)
What are the other requirements for my parent or other qualifying relative to be claimed as a dependent on my federal income tax return?
- You can’t claim any dependents if you, or your spouse if filing jointly, could be claimed as a dependent by another taxpayer.
- You can’t claim a married person who files a joint return as a dependent unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid.
To be a qualifying relative the person:
- Can’t be your qualifying child or the qualifying child of any other taxpayer.
- Must be either related in one of the ways for relatives who don’t have to live with you, or live with you all year as a member of your household.
- The person’s gross income for the year must be less than $4200.
- You must provide more than half of the person’s total support for the year.
My parent gets more than $4200 a year in social security can she still qualify to be my dependent?
Yes. Gross income is all income in the form of money, property, and services that isn’t exempt from tax. For example gross receipts from rental property are gross income. Income from a business is gross income. For social security many people are exempt from income tax on their social security. A person whose sole income is social security is unlikely to pay any income tax on her social security benefits. And accordingly this income is exempt from tax.
How can I show that I’ve paid more than half of my parent’s support?
To figure if you provided more than half of your parent’s support, you must first determine the total support provided for her. Total support includes amounts spent to provide food, lodging, clothing, medical and dental care, recreation, transportation, and similar necessities. If you provide your parent with a place to live you are considered to have provided support equal to the fair rental value of the room, apartment, or house you provide. This is true whether they live with you or not. Medical insurance premiums you pay including for supplementary Medicare coverage are included in the support you provide.
What if I share the costs of support for my parent with my siblings, can I still claim my parent as a dependent?
Yes, if there is a multiple support agreement. Two or more persons, each of whom would be able to claim the person as a dependent but for the support test, can together provide more than half of the person’s support. When this happens, these persons can agree that any one of you who individually provides more than 10% of the person’s support, but only one, can claim that person as a dependent. Each of the other must sign a statement agreeing not to claim the person as a dependent for that year.
How can Hammerle Finley help me?
Adult children are often the persons who encourage their parents to do estate planning. Estate planning isn’t just for rich people, and it isn’t just wills and trusts. Even if your parents have few, if any, assets they will need medical powers of attorney and other advanced directives and will need to plan for long term care through Medicaid or other programs. This is a perfect time to consider whether your parent can be claimed as a dependent on your taxes, or as part of a multiple support agreement.