Your Parents or Adult Children May Be Your Dependent

Because of the changing state of the demographics throughout the nation, there’s a new type of dependent claim on the rise: Parents and adult children of middle-aged taxpayers.

As a taxpayer, if you manage the daily care and financial support of one or more of your parents, and your parents can be classified as a dependent, you may be able to reap more tax benefits than you originally thought. Your parents aren’t required to live in the same house as you, much like the rule for other dependents. The can either live in their own home or a community for retirees and the elderly and still meet the requirements to be claimed as a dependent under the law. Your parents just have to meet the requirements for a dependent according to the IRS.

These requirement include:

  • The parental dependent must be the legal parent of the taxpayer, whether biologically or adopted.
  • Dependent relatives must makes less than $4,050 in gross taxable income for the 2016 tax year.
  • Over half of the parent’s financial support must be provided by the taxpayer.
  • The parent must be a U.S. citizen or resident of Canada or Mexico.
  • The parent must not be required to file a federal income tax return. The income rules for this are:
  • Under 65, filing single: at least $10,350 income to file a return
  • Over 65, filing single: at least $11,900
  • Under 65, filing married joint: at least $20,700
  • Over 65, filing married joint: at least $21,950
  • The parental dependent can’t file a joint return for any reason except claiming a refund.

You can claim both parents provided they each meet the requirements above.

If your parents doesn’t meet the income requirements to be claimed as your dependent, but you paid for their medical care, you may still be eligible to deduct those expenses as an itemized deduction. You still have to have provided 50 percent of their support.

Deductions are only one way to save money at tax time when you support your parents or other relatives. There is also a non-refundable tax credit, known as the Child and Dependent Care Credit, which can account for some of the costs of paying for care for a qualifying relative. Your parent must be incapable of self-care, whether physically or mentally.

In order to qualify for this credit, you’ll need to use your earned income and work expenses. That means the care needs to have been given while you were at work or looking for work. You’ll need to give the IRS the care provider’s Social Security Number or other ID. Married taxpayers who file separately from their spouse aren’t entitled to claim this credit.