Claiming a Parent as a Dependent on a Tax Return

With more children caring for or providing financial support for aging parents, the question of whether a parent can be claimed as a dependent sometimes arises. I've investigated the possibility and here is my understanding.

A parent can potentially be a dependent provided they first meet the definition of a Qualifying Relative. Of the four criteria, all parents meet two of the criteria, relationship and not a qualifying child. Here are the other two criteria that must be met to be a qualifying relative:

Income - Taxable income must be less than the value of an exemption for the current tax year, which is $3,500 in 2008. Tax exempt income, e.g. municipal bond interest, and social security benefits that are not taxed would not be included. Although Roth IRA income was not specifically mentioned, I assume that it counts as tax exempt income.

However, pension income and IRA distributions, which are taxable income, would be counted.

Support - Taxpayer claiming the parent must provide over half the parent's support. For this criteria, tax exempt income is counted towards their support. A tricky part of support is counting the support contribution of a parent's home which has no mortgage.

It is acceptable if multiple people share in providing over 1/2 of the parent's support. For this case, the people involved would file Multiple Support Declaration, form 2120, to choose which person can claim the dependency for the tax year.

Once it is determined a parent is a qualifying relative, three additional criteria must be met. The parent must be a U.S citizen or a resident of the United States, Mexico or Canada, and generally not filing a joint return with their spouse. If they do file a joint return, there are allowable exceptions, e.g. not required to file, and filing only to get a refund. Finally, the taxpayer claiming the parent cannot be a dependent of another taxpayer.

If all seven criteria are met, then a parent can be claimed as a dependent for tax purposes. However, if one of the criteria is not met, the parent cannot be claimed as a depended.

Here is some additional information on Qualifying Relatives on About.com and Lawyers.com. As always, consult a tax professional about one's specific situation.

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This is not financial or tax advice. Please consult a professional advisor.

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