It’s been said that life comes full circle. Well, so do taxes.
It’s difficult to watch your parents grow old. The ones who supported you while growing up are now the ones you’re taking care of. You may be curious if you can claim your parents as dependents on your tax return like they once did for you.
The answer lies in the following five tests set up by the IRS:
#1. They must be related to you.
#2. They must be a citizen or resident of the United States, Canada, or Mexico.
#3. They must not be filing a joint tax return.
#4. They must have an annual gross income of less than $4,000.
#5. You must provide more than 50% of their financial support for the year.
With these qualifications in mind, let’s take a look at some special circumstances that might apply to you and your parents.
Can I claim my parent as a dependent if…
…they receive Social Security Retirement Benefits?
Yes. Your parent is receiving benefits for the time and effort they put in while on the workforce. This amount is not included in their gross income amount for the year. That means that Rule #4 above is still met even if their benefits come to more than $4,000 annually.
EXCEPTION: If your parent decides to go back to work after retiring, then that income could affect Rule #4 and Rule #5 above. Here’s how. If their income amount from the new job comes out to be more than $4,000 for the year, then you can not claim them as a dependent on your taxes. In turn, if they are providing more than 50% of their own support with the new job, then you cannot claim them as a dependent either.
…they receive Social Security Disability?
Yes. Millions of Americans each year enter into the Social Security Disability program because they are no longer able to work due to a medical condition. Disability is available to those whose condition is expected to last longer than 12 consecutive months (or already has). One can receive this benefit until they are either no longer disabled or have reached full retirement age.
EXCEPTION: You can claim your parent as a dependent on your tax return without their benefit being affected. However, Social Security benefits can limit any wage income they receive while on disability (ie: from another job they are employed with).
…they receive Supplemental Security Income (SSI)?
Yes. This is a program available to those who have a disability which makes them unable to work but don’t qualify for regular disability benefits. This also works a bit differently than the disability program mentioned above. While you can claim your parent on your return if they receive SSI, your 50% support may exceed their income requirement to qualify them for the SSI program in the first place. Why is that? It is a means-tested disability program.
…they have a job?
Maybe. This situation is becoming more and more common. Whether your parent is bored at home, needs the extra cash, or simply enjoys the workforce, they may have a new job. It’s important for them to realize that the income they are earning is taxable and now included in their gross income amount. When claiming your recently-employed parent as a dependent, you’ll need to keep in mind Rule #4 and #5 above. If their new job is earning them more than the $4,000 annual threshold, then you can no longer claim them as a dependent. If this also means that you are no longer providing 50% of their support, then claiming them is not an option for you. That being said, if you still pass the tests with flying colors, then enjoy your tax deduction!
Taxes can be confusing. So can Social Security benefits.
Combining the two can lead to hundreds of questions and one major headache. When the ultimate goal is to help out a parent who’s always cared for you, it’s tough to focus on money. However, if you fit the qualifications, then you’re entitled to a tax deduction. So let’s get down to filing that tax return. With RapidTax, our customer support team is ready to help you prepare those taxes; deduction or not.
My father’s only source of income is disability therefore I help support him and I am also his in home supportive services provider. I actually work for in home supportive services (my second source of income) by taking care of him but we do not live in the same home. I am not married so should I file single or head of household even though we do not live in the same home?
Also, do I qualify for the dependent care credit?
Hello Mica,
If you are filing head of household, you must be the sole provider for your home and have a qualifying dependent. If you are claiming your parents, your dependent parent does not have to live with you. You must have paid more than half the cost of providing for a home all year which you lived in and provided for more than half of the expenses for your qualifying dependent(s). However, in order to claim the Dependent Care Credit, the dependent must have lived with you for more than half the year. If your parent is physically or mentally unable to care for himself, he or she is a qualifying individual. If you paid someone to care for your child, spouse, or dependent, you may be able to claim the Child and Dependent Care Credit on your federal income tax return.
My father is disabled, and received disability benefits, mother stays at home to care for him, and my sister who is also disabled, but has a part time job, making more that 4,000 a year, and she also has disability benefits. My mother occasionally babysits not receiving over 4,000 a year for her time because she is often caring for my father and sister. I provide over 50% of the expenses and I only claim my father. Am I able to claim my mother too?
You should be able to claim both parents, as long as neither your father or mother makes over the personal exemption amount for that year. You can also utilize the IRS tool provided to determine the qualification with more clarity.
Hello. My mother is 43 with 3 minor children. She left bed with me in my household and I support her and the three kids. No one else will claim the kids. She receives social security, disability and I receive $ as a in home service provider from the state. She also received food stamps. Those are the only incomes. Can I claim her and the minors? What do I need to check and be sure of? What are my options?
Hello Cori,
You can claim your parent if she receives Social Security Benefits, Disability, assistance from Supplemental Nutrition Assistance Programs or income received in cash payments. You must have provided more than 50% for her and her children financially and they must have live with you more than half the year.
How do I prove I provided that? Especially for things like an audit? What paperwork and proofs do I need to have available?
I am a Veteran , I am claiming my mother as a dependent. I get an additional $130, Her Social Security check was reduced by that amount. Now her nursing home bill is going up. How is my allowance counted as her income.
It would be best to either speak with the IRS or the SSA for further assistance on this matter. For assistance from the IRS, you can contact by their 1-800-829-1040 number or the local office in your state. You can also contact the SSA using the provided information listed on their site.
Hi..I live with my daughter, I’m 63 and collect 18000 per year in survivor benefits..no other income..my daughter works and earns a little less than what I bring in monthly, but she pays rent and I watch my granddaughter…can she claim me? Also, can I go on her health insurance if she claims me as a dependent??
Hello Donna,
Your daughter can claim you if you meet the requirements. If she takes care of more than 50% of you financially while living with you, she can claim you as a dependent on her tax return. Every situation differs. As per health insurance, you may contact her health insurance company for more details.