The article below is accurate for your 2017 taxes, the one that you file this year by the April 2018 deadline. Tax information below will change next year for your 2018 taxes since the personal and dependent exemption has been eliminated under the new tax law effective on your 2018 taxes, but won’t impact you this year. Learn more about tax reform here.
For that time in a person’s life when he or she begins to take care of their parent, it is important to know that the IRS allows those individuals to claim their parents as dependents on their tax return.
As is the case with anything tax-related, you’ll have to meet the requirements; and once those requirements are satisfied, you’ll be able to receive an additional tax break for your efforts that was designed to help offset the costs associated with caring for a parent.
However, don’t worry about knowing the tax rules come tax time, TurboTax will ask you simple questions about you and your dependents and gives you the dependent deduction you’re eligible for based on your answers.
Support Means Support
To meet the support requirements necessary to claim your parent as a dependent on your tax return, you must cover more than half of your parent’s support costs, meaning 51% or more of their support costs must be covered by you. These costs include food, housing or lodging expenses, clothing, and medical services and/or equipment costs.
If support for your parent was given by a group of individuals or family members, you may want to sign a Multiple Support Declaration form which would allow a single person in the group to claim your parent as a dependent, thus giving the tax break to a single person.
Residency and Relationship
The technical term that the IRS uses to meet the relationship requirement for these tax and life situations is “Qualifying Relative.” This means that the person you’re caring for can be your parent, an in-law, or even a grandparent. However, they must be related to you biologically, by adoption, or through marriage (which would technically be a biological relationship with your spouse).
And guess what? The IRS has residency requirements as well. To meet the residency requirement, the person you are caring for must meet one of the following:
- Be a legal US Citizen
- Be a U.S. National
- Be a U.S. Resident Alien
- Be a Resident of Canada or Mexico
Your parent, in-law, grandparent, or other relative does not have to live with you all year like a non-relative.
Social Security and Gross Income
The parent you want to claim as a dependent on your tax return must have a social security number (SSN) or an individual tax identification number (ITIN). Either of these numbers will satisfy the identification requirement for the IRS.
To be allowed to claim your parent as a dependent, your parent’s taxable income cannot be more than $4,050 for your 2017 tax year. This means that if your parent earns more than $4,050, you aren’t eligible to claim them as a dependent. Non-taxable income, such as Social Security, does not count toward this amount.
Also, the parent you’re claiming as a dependent cannot file a joint tax return.
More Perks and Requirements
One of the last requirements that needs to be satisfied is that, if you want to claim your parent as a dependent on your tax return, you yourself cannot be eligible as a dependent on someone else’s tax return. Again, you cannot be claimed as a dependent or eligible as a dependent (even without being claimed) if you plan to claim your parent as a dependent. Once all of the requirements are met, you’ll be happy to receive an additional $4,050 tax exemption on your return.
You are also allowed to include your dependent parent’s medical expenses when calculating your medical deductions, and you may also be able to claim the Dependent Care Credit if your parent needs assistance while you’re at work or away.
Don’t worry about knowing these tax laws. TurboTax will ask you simple questions and give you the tax deductions and credits you’re eligible for based on your answers. If you have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent to get your tax questions answered. A TurboTax Live CPA or Enrolled Agent can even review, sign, and file your return.