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tax question on dependents
- Thread starter RM2002
- Start date
Originally posted by RM2002
can you claim in laws as dependents if they stayed here for 6 months (182 days)?
only spouse and children can be claimed as dependents, NO ONE ELSE REGARDLESS OF THEIR PERIOD OF STAY.
No, you cannot...(based on info posted by u) seems like they will not qualify for the citizenship test....
To qualify as a dependent, a member of your household must pass the following four tests. To qualify as an exemption, he or she must then pass a fifth test. But there are advantages to qualifying as a dependent that we'll discuss later, even if you don't meet the additional test to qualify as an exemption.
1. Member-of-household or relation test
To meet this test, a person must live with you as a member of your household for the entire year, or be a listed relative. Listed relatives include biological, adopted or stepchildren, siblings, half or stepsiblings, your ancestors, stepparents, aunts, uncles, nieces, nephews and in-laws; sorry, no cousins or foster parents.
Even those who don't qualify as relatives can qualify as members of your household, but they must live with you all year.
A child born during the year can still qualify as a dependent. So can someone who dies mid-year.
2. Citizenship test
To meet this test, the person must be a U.S. citizen or resident, or a resident of Canada or Mexico.
3. Joint-return test
Normally, you can't claim a person as a dependent if he or she files a joint return. But this test doesn't apply if the joint return is filed merely to claim a refund and no tax liability exists for either spouse on separate returns.
For example, if your daughter files a joint return with her husband and each of them has earned $4,000, neither would have had to pay a tax. If they file to get a refund of any withholdings, that doesn't disqualify them under this test.
4. Support test
You have to provide more than half the person's total support for the calendar year. You can even pay support with borrowed money. Support is what's spent, not what's earned. If you have a child who won a million-dollar lottery and all that money was invested, you've still provided 100% of that child's support.
What you save with a dependent
If you meet all of the above tests, you have a dependent. Let's look at what that entitles you to claim . . .
If someone qualifies as your dependent, you're allowed to deduct all his or her medical expenses -- if you pay them. So you deduct all your kid's checkups, doctor visits, vaccines, etc.
If an aged parent qualified as a dependent, you can also deduct all his or her medical expenses, including any expenses in a nursing home. Here's where good planning can save substantial dollars.
If you have parents in a nursing home, they probably aren't earning big dollars, and the deduction for their medical costs won't save them much. However, if they gift the dollars to you (tax-free) and you write the checks, the deductions belong to you. Not only have you reduced your parents' estates for Medicaid qualification in the future, but also now you can qualify for substantial tax savings.
If they're in a nursing home for medical reasons, all of the payments qualify as medical expenses. If you're paying $5,000 per month each, that's a $120,000 medical deduction that goes on your return!
Now, let's qualify them for the exemption. To get that deduction, they must pass a fifth test . . .
5. Gross-income test
Gross income includes all income in the form of money, property and services. Tax-exempt income and Social Security don't count for this test. If you're totally and permanently disabled, money received for services rendered at a sheltered workshop also doesn't count.
To pass this test, your dependent can't have gross income of $3,000 or more for 2002. If you fail this test, the person may still be a dependent, but you won't get the exemption deduction.
To qualify as a dependent, a member of your household must pass the following four tests. To qualify as an exemption, he or she must then pass a fifth test. But there are advantages to qualifying as a dependent that we'll discuss later, even if you don't meet the additional test to qualify as an exemption.
1. Member-of-household or relation test
To meet this test, a person must live with you as a member of your household for the entire year, or be a listed relative. Listed relatives include biological, adopted or stepchildren, siblings, half or stepsiblings, your ancestors, stepparents, aunts, uncles, nieces, nephews and in-laws; sorry, no cousins or foster parents.
Even those who don't qualify as relatives can qualify as members of your household, but they must live with you all year.
A child born during the year can still qualify as a dependent. So can someone who dies mid-year.
2. Citizenship test
To meet this test, the person must be a U.S. citizen or resident, or a resident of Canada or Mexico.
3. Joint-return test
Normally, you can't claim a person as a dependent if he or she files a joint return. But this test doesn't apply if the joint return is filed merely to claim a refund and no tax liability exists for either spouse on separate returns.
For example, if your daughter files a joint return with her husband and each of them has earned $4,000, neither would have had to pay a tax. If they file to get a refund of any withholdings, that doesn't disqualify them under this test.
4. Support test
You have to provide more than half the person's total support for the calendar year. You can even pay support with borrowed money. Support is what's spent, not what's earned. If you have a child who won a million-dollar lottery and all that money was invested, you've still provided 100% of that child's support.
What you save with a dependent
If you meet all of the above tests, you have a dependent. Let's look at what that entitles you to claim . . .
If someone qualifies as your dependent, you're allowed to deduct all his or her medical expenses -- if you pay them. So you deduct all your kid's checkups, doctor visits, vaccines, etc.
If an aged parent qualified as a dependent, you can also deduct all his or her medical expenses, including any expenses in a nursing home. Here's where good planning can save substantial dollars.
If you have parents in a nursing home, they probably aren't earning big dollars, and the deduction for their medical costs won't save them much. However, if they gift the dollars to you (tax-free) and you write the checks, the deductions belong to you. Not only have you reduced your parents' estates for Medicaid qualification in the future, but also now you can qualify for substantial tax savings.
If they're in a nursing home for medical reasons, all of the payments qualify as medical expenses. If you're paying $5,000 per month each, that's a $120,000 medical deduction that goes on your return!
Now, let's qualify them for the exemption. To get that deduction, they must pass a fifth test . . .
5. Gross-income test
Gross income includes all income in the form of money, property and services. Tax-exempt income and Social Security don't count for this test. If you're totally and permanently disabled, money received for services rendered at a sheltered workshop also doesn't count.
To pass this test, your dependent can't have gross income of $3,000 or more for 2002. If you fail this test, the person may still be a dependent, but you won't get the exemption deduction.