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 parents do not file taxes and do not work but they recieve ssi for my fathers dialysis I live with them and my 15 year old brother and my child can I claim all of them? Meaning my parents, brother and daughter?
My grandmother receives SSI, SEC8 and SNAP(food stamps). She qualifies under questions 1-5 above. I help pay for medications, I drive her to all her dr appts and errands. If Im working I give her cab fare. I do help her pay for food at times or miscellaneous items such as toiletries, clothing, and pet care expenses (vet and food). I have one child and I make under 20k a yr. Can I claim her? No one in our family supports or plans to claim her.
You may likely claim her. You may use the IRS tool to be sure.
Hi, my mother just turned 63 the 10th of this year. The house we live in is in her name, i pay her cash for almost all the bills. She is disabled, has no job, and draws social security, also doesn’t file a refund. Will this affect her at all if i claim her as a dependent? I don’t want ger SS or health insurance to be affected. Thanks, Zach
my mother is disabled and doesnt work and meets all other criteria for me to claim her for last year. my question is… what do I need to do or show that I have provided 50% of financial care. I paid all bills and mortgage and food but how do I show that if I am efiling my taxes online?
IF she is not filing a tax return or is not being claimed by another taxpayer, you won’t have to send in supporting documents to claim her as your dependent. If the IRS does request additional documentation, you will need to follow along with the instruction given to you through their correspondence.
My mother-in-law lives with us and she’s receiving SS benefits, and she doesn’t work. We paid for all expenses in the house. Can we claim her as dependent on our income tax?
Please utilize the tool provided by the IRS for further information on claiming your parent as your dependent. Generally, if they are not earning over the personal exemption amount, and you are providing more than 50% of their financial support for the year, after meeting these qualifications, you are able to claim your parent as a dependent.