Usually, our staff Certified Tax Cat handles readers’ questions about taxes, but he’s too busy staring at a blank spot on the wall. Filling in for him is Laura’s dad, a retired accountant and real live independent tax preparer. Exclusively on Consumerist this spring, Tax Dad answers your questions. Also, to celebrate federal income tax deadline day, we link some coupons for free fast food deals good for today only.
This should be the last installment of Ask Tax Dad for 2013: tune in next year when Tax Cat comes back, Tax Dad returns, or maybe Tax Cat’s dad will show up to handle your tax questions.
I make about 80K and live with my mother in her house, she is about 60 years of age. She owns the house but I pay for her mortgage, HOA, property taxes, utilities, food, house fix up, car gas, everything. She does not work, makes nothing at all, not a dollar, has absolutely no savings or equity other than the house. I have claimed her as a dependent for a few years, she had zero income. Lately I started to pay off her credit card debts. In 2012 I paid off one of the credit cards with the agreement from the credit company around $5K was forgiven. She received 1099-C for about $5500.
Now the hard part. Since she owns the house with about $110K mortgage and $200K market estimated value. Thus, as I understand, she cannot plead poverty (form 982).
1) Can I still claim her as a dependent this time? On one hand we have 1099-C for $5K, but on the other hand, I paid all the bills and debts.
2) If I cannot claim her as a dependent, I guess I cannot be head of a household, right?
Overall, can any advice be given? Not claiming her as a dependent would make my taxes much, much higher to the tune of $4K.
Hi Alex: You are a great son. As I see it, the dependent and head of household questions would depend on a simple test of whether you or your mother provide over half of her support. Without seeing the numbers, it sounds as if you qualify.
If you will go online to IRS.gov and look for publication 17, the IRS provides a worksheet for listing everything you pay vs what your mother pays. You would have to consider value of housing, food, utilities, etc, and which of you pays for the most. Just be reasonable.
Do not send your calculations to the IRS. Keep them in your files.
Please remember that you get the advice that you pay for. Information provided by Tax Dad is a starting point, and not intended as a substitute for consulting your own real, live tax preparer or cat.
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