Taxpayers may claim their children, as well as their parents, as dependents and get more personal exemptions on their tax returns. Parents may be claimed as dependents if they meet certain tests.
When Do Parents Qualify as Dependents?
In order to qualify as dependents, the parents must meet all of the following tests:
- Member of household or Relationship Test
- Citizen or Resident Test
- Joint Return Test
- Gross Income Test
- Support Test
Member of Household or Relationship Test
In order to qualify as a dependent, that person must either live with you for the entire year as a member of your household or is related to you but does not need to live with you. As such, parents do not need to live with you in order to be qualified your dependents.
Citizen or Resident Test
A dependent must be a citizen of the United States, resident alien, or a resident of Canada or Mexico.
Joint Return Test
Generally, a person cannot be claimed as a dependent if he/she files a joint return with someone else. An exception is if the person only files a joint return to get a refund and neither that person nor his/her spouse had any tax liabilities. Thus your parents cannot be filing their own jointly returns for taxes that they owed and be claimed as dependents on your tax return.
Gross Income Test
For tax year 2004, a dependent cannot have gross income of $3,100 or more. An exception only exists for children under the age of 19 or students under the age of 24.
To claim someone as your dependent you generally must provide more than half of that person's total support during the year. Support generally means shelter, clothing, transportation, medical care, and food. The fact that the person you are supporting has enough money to support his/herself is irrelevant. Your percentage of support will be reduced if that person actually uses his/her money to support him/herself.
If you support recipients of social security benefits and state benefits, you may need to show that they have not actually used the funds to support themselves more then they have relied on your support.
Do I Need an Attorney to Help Me with My Tax Problems?
Tax laws are complex and ever-changing. Although there are various tax preparation softwares on the market that may help you with your tax problems, they cannot provide the same level of service that an experienced and knowledgeable tax attorney can. If you are unsure whether your parents qualify as your dependents or you need someone to represent you before the IRS, a tax attorney can help you.