Ask Tax Dad: Invasion Of The Dependent Relatives

TAXDADSEZHistorically, our staff Certified Tax Cat has handled readers’ questions about taxes, but he took feline early retirement and hung up his oversized eyeglasses. Filling in for him is Laura’s dad, a retired accountant and real live independent tax preparer. Exclusively on Consumerist, Tax Dad answers your questions.

This week, two readers ask, “Can I claim this relative taking up space in my home as a dependent?”

I have a question regarding claiming dependents.

Last year our household suddenly gained two new members. My barely employed son and my 87 year old father-in-law both moved in last June. Neither are paying rent and we are covering well over half of their expenses. Can either or both be claimed as dependents?

Thank you,
Full House

Dear Full: Sounds as if you are indeed holding a poker hand. You do not share with us your son’s age, or how much income either guest may have from earnings, social security, pensions, investments, etc. Possibly both of them could be claimed as qualifying relatives, but you would have to do the IRS support test to determine how much support you and they provide.

Basically, you would list your relative’s expenses as well as the entire household’s expenses, and compare this to what each of them provides. You must provide over half of their support. The IRS has an official form for this, of course. It’s called Worksheet 3-1.

Amy writes:

My daughter is 19 (not a full time student) this year and she only earned $1,700. I know I can put her on my taxes as a deduction because she earned under $3,000 and I provided over half of her support but do I add her income to ours? Does she have to file if I claim her or not? Would it be better for her to file on her own and me not claim her? Thanks for any advice!

Hi Amy: It would appear that your daughter would not qualify as your dependent child, as she is over 19 and not a student. As you point out, she would qualify as a dependent relative if she lives with you and you provide over half her support. You could claim an exemption for her on your tax return, based on what you have told us.

You would not claim her income as your own. Your daughter would not be required to file a tax return, unless she had federal and/or state taxes withheld from her $1700, and wished to have those refunded. She would not claim herself as an exemption, as you are claiming her.

Disclaimer: The nature of free advice is that you often pretty much get what you pay for. Questions answered in the “Ask Tax Dad” column should not serve as a substitute for consulting a tax preparer, accountant, tax attorney, or certified tax cat of your very own. Tax Dad regrets that he cannot offer advice privately over e-mail.

Have a question for Tax Dad about your federal or state tax returns? Send it to us at tips@consumerist.com with “ASK TAX DAD” in the subject line. We’ll run the answers as soon as we can get him to stop Photoshopping pictures of wild grouse.