Dependents are either the taxpayer’s qualified kids or a qualifying relative. The taxpayer’s spouse is not eligible to be claimed as a dependent. Dependents can include a child, stepchild, brother, sister, or parent.
If you don’t have a child who qualifies as a dependent, you might know someone who does if you offer more than half of their financial support.
Your parents, stepparents, grandparents, nieces and nephews, in-laws, and any other blood ancestor who does not live with you are all examples of qualified relatives.
Other distant relatives who live with you for the entire tax year may also qualify. To qualify in 2022, all dependent relatives must have less than $4,400 in gross taxable income.
Dependent Parents
Taxpayers may declare their children as dependents and their parents to receive extra personal exemptions on their tax returns. Parents who match specific criteria may be claimed as dependents.
When a person begins to care for their parents, it is crucial to know that the IRS permits those individuals to claim their parents as dependents on their tax returns.
Parents are subject to different tax rules. You may be able to file as head of household if your qualifying person is your father or mother, even though your parent does not live with you.
However, as a dependent, your mother or father must meet the requirements. In addition, you must pay more than half the cost of maintaining a home that was your parents’ primary residence for the whole year.
Paying more than half the cost of your parent’s senior living or assisted care facility counts as paying more than half the cost of maintaining your parent’s primary residence.
There are a few criteria, as with anything tax-related. Once the requirements are met, you will be entitled to earn an additional tax benefit for your efforts, which is intended to offset the costs of caring for a parent.
Here are the essential requirements to remember while claiming a parent as a dependent:
- Is supported by you (more than 50%)
- Relationship and residency
- Earned less than $4,400 in total (gross) income
- Is not a qualifying dependency of another person.
Support Test
There is a support test to meet the support requirements for claiming your parent as a dependent on your tax return.
You must pay more than half of your parent’s support expenditures, which means you must pay 51% or more of their support.
These expenses include food, hotel, clothing, entertainment, medical services, and equipment. You may include your dependent parent’s medical expenses if you itemize when calculating your medical deductions.
If your parent were supported by a group of people or family members, you might choose to sign a Multiple Support Declaration (Form 2120) if you also supported them and want to claim them.
A Multiple Support Declaration (Form 2120) is a signed statement signed by each eligible person surrendering the right to claim the parent as a dependent.
Relationship and Residency
The IRS utilizes the technical phrase “Qualifying Relative” to meet the relationship criteria for these tax and life scenarios. This means that the person you’re looking after could be a parent, in-law, or even a grandmother.
They must, however, be biologically, adoptively, or married to you (which would technically be a biological relationship with your spouse). Like a non-relative, your parent, in-law, grandmother, or other relative does not have to reside with you all year.
What’s more? The IRS also has residence requirements. The person you are caring for must meet one of the following requirements to meet the residency requirement:
A dependent must be a citizen of the United States, a resident alien, or a resident of Canada or Mexico.
Gross Income and Social Security
You must have a social security number (SSN) or an individual tax identification number (ITIN) for the parent you want to claim as a dependent on your tax return (ITIN). Either of these numbers will suffice for the IRS’s identification requirements. Furthermore, the parent for whom you are claiming cannot submit a joint tax return.
To be eligible to claim your parent as a dependent for the tax year 2022, your parent’s taxable income must be less than $4,400. This implies you can’t claim your parent as a dependent if they make $4,400 or more. Non-taxable income, such as Social Security, is not considered income for the purpose of the requirement.
More Benefits and Requirements
One of the last requirements for claiming your parent as a dependent on your tax return is that you cannot be claimed as a dependent on another person’s tax return or be eligible as a dependent (even if you are not claimed) if you plan to claim your parent as a dependent.
If you meet all the qualifications, you may be eligible for the new “Other Dependent Credit,” worth $500 on your tax return. Even more fantastic news – if your parent requires assistance while you are at work or traveling, you may be able to claim the “Dependent Care Credit.”
Medical Expenditures Can Be Deducted
You might be able to claim medical expenses as an itemized deduction on Schedule A if you paid for your parent’s medical care. Itemized deductions are advantageous when they exceed the amount of the standard deduction permitted.
If you give more than half of your parent’s support, you can deduct their medical expenses even if they do not meet the income threshold to be listed as your dependent.
To claim these expenses in 2022, your total medical expenses, including all costs for prescription drugs, equipment, hospital care, and doctor’s visits, must exceed 7.5 percent of your adjusted gross income.
Credit for Dependent Care
The Child and Dependent Care Credit is a non-refundable tax credit for 2022. It is available to taxpayers who pay for a qualifying individual’s care and meet certain other criteria.
They qualify if your parent is physically or psychologically incapable of caring for themselves.
You must have a source of income and costs related to your job. This means that care had to be given when working or looking for work.
You must be able to identify your caregiver correctly. This includes providing the provider’s name, address, and phone number (either Social Security number or employer identification number).
You cannot claim this credit if you are married but submit a separate return from your spouse.
Tax Breaks Can Make a Significant Difference
Simultaneously caring for two generations is exhausting, so be sure you’re getting the financial help you deserve. Knowing how to declare dependents correctly can mean the difference between owing taxes and obtaining a refund.
If you’re supporting children or other family members, a financial advisor or tax specialist can help guarantee you don’t miss out on any tax breaks.
Do I Need an Attorney to Resolve My Tax Issues?
Tax regulations are complicated and constantly changing. Although tax preparation software programs can assist you with your tax issues, they cannot provide the same level of assistance that an experienced and qualified tax attorney can.
A tax attorney can assist you if you are confused if your parents qualify as dependents or if you need someone to represent you before the IRS.
