I live in New York City, and I take care of my mother, stepfather, and three sisters under the age of 18 in Charleston, S.C. My mother was diagnosed with depression and schizophrenia, and my stepfather has cancer. Neither of them has worked in over a year. I have paid the mortgage for the house as well as provided cash for other expenses since August 2016. Can I claim all of them as dependents in 2017?
To claim a person as a dependent, there are several basic tests that need to be passed.
First, if you are claimed as a dependent by someone else, then you cannot claim any dependents of your own.
Next, the people being claimed as dependents must be unmarried; however, if they are married, they cannot file a joint tax return, unless it’s only to claim a refund of tax withheld and no tax liability would exist for either spouse if separate returns were filed.
Finally, they must be a U.S. citizen or resident alien, or a resident of Canada or Mexico.
In addition to the basic requirements, to be able to claim someone as a dependent, he or she must be either a qualifying child or a qualifying relative:
To be a qualifying child:
- The child must be the taxpayer’s child, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, or descendant of any of them;
- The child must be (a) younger than the taxpayer and either be under age 19 or a full-time student under age 24, or (b) any age if totally and permanently disabled;
- The child must live with the taxpayer for more than half the year;
- The child must not provide more than half of his or her own support;
- The child must not file a joint return (unless filed only to claim a refund); and
- The child must not be a qualifying child of another taxpayer
The tests for a qualifying relative are:
- The person must not be the taxpayer’s or anyone else’s qualifying child;
- The person must either (a) live with the taxpayer all year as a member of his household, or (b) be related to the taxpayer;
- The person must have gross income less than $4,050; and
- The taxpayer must provide more than half of the person’s support for the year
Support includes amounts spent for food, lodging, clothing, education, medical, recreation, transportation, and other necessities. Amounts a person receives are not support unless actually spent for support. Accordingly, you should ensure that that the cash you provided to your family have actually been used for support.
Based on the information you provided, it appears that your mother, stepfather, and your sisters could qualify as dependents for 2017 because they are qualifying relatives. However, the basic dependency tests must also be passed. Since they are related to you, they do not have to live with you. Know that if your mother or stepfather receive unemployment compensation benefits, which are considered gross income, and the total is over $4,050, this would disqualify them as being a qualifying relative.
If you determine that your family members qualify as dependents, be sure to keep well-documented receipts of the support payments you have provided.
Answered by: James G. McGrory, CPA, and Stephanie K. Otake, CPA, are with Drucker & Scaccetti in Philadelphia.