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.
Special tax rule for parents. If your qualifying person is your father or mother, you may be eligible to file as head of household; even if your parent doesn’t live with you. However, your mother or father must meet the qualifications as a dependent. Also, you must pay more than half the cost of keeping up a home that was your parent’s main home for the entire year. If you pay more than half the cost of your parent’s senior living or assisted care facility, that counts as paying more than half the cost of keeping up your parent’s main home.
As with anything tax-related, you will have to meet a few requirements. Once the requirements are satisfied, you’ll be able to receive an additional tax break for your efforts, designed to help offset the costs associated with caring for a parent.
However, don’t worry about knowing the tax rules, TurboTax will ask simple questions about your dependents and give you the tax deductions and credits you’re eligible for based on your answers.
Here are the main reminders for claiming a Parent as a dependent:
- Is supported (more than 50%) by you
- Residency and Relationship
- Earned less than $4,200 of gross (total) income
- Is not a qualifying dependent of anyone else
Support Means Support
To meet the support requirements necessary to claim your parent as a dependent on your tax return there is a support test. You must cover more than half of your parent’s support costs, meaning 51% or more of their support must be covered by you. These costs include food, housing/lodging expenses, clothing, entertainment, medical services and/or equipment costs. You are also allowed to include your dependent parent’s medical expenses, if you itemized, when calculating your medical deductions.
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 2120) if you also supported your parent and you want to claim them. A Multiple Support Declaration (Form 2120) is a signed statement from each eligible person, waiving his or her right to claim the parent as a dependent.
Residency and Relationship
The technical term 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, 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). Your parent, in-law, grandparent, or other relative does not have to live with you all year like a non-relative.
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
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. Also, the parent you are claiming cannot file a joint tax return.
To be allowed to claim your parent as a dependent, your parent’s taxable income must be less than $4,200 for tax year 2019. This means that if your parent earns $4,200 or more, you aren’t eligible to claim them as a dependent. Non-taxable income, such as Social Security, does not count as their income for the requirement.
More Perks and Requirements
One of the last requirements to claim your parent as a dependent on your tax return is that you cannot be claimed as a dependent on someone else’s tax return or eligible as a dependent (even without being claimed) if you plan to claim your parent as a dependent.
Once you have met all of the requirements, you could be eligible for the new “Other Dependent Credit”, worth $500 on your return. More good news! You may also be able to claim the ‘Dependent Care Credit” if your parent needs assistance while you are at work or away.
Don’t worry about knowing the tax laws. TurboTax will ask simple questions about you 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. TurboTax Live CPAs and Enrolled Agents are available in English and Spanish, year round and can even review, sign, and file your tax return.