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Dependency Exemption for an Elderly
Person
Receiving Long-Term Care
A taxpayer can claim a federal income tax exemption for an
elderly parent or other person whom the taxpayer is supporting if the following
three tests are met:
 | INCOME LIMIT
The individual being supported must have
gross taxable income of less than the applicable exemption amount ($3,650 for
2009). Gross income is defined to include all forms of money, property, and
services that are not exempt from tax. Tax-exempt income, including the
excluded portion of social security payments, is not counted for this purpose.
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| NO JOINT RETURN
The individual being supported cannot have
filed a joint return with his or her spouse for the taxable year beginning in
the calendar year in which the taxable year of the taxpayer begins.
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| DEPENDENT OF THE TAXPAYER
The
individual must be classified as the taxpayer’s "dependent" as defined by
the Internal Revenue Code. The dependency test is based on the following
three criteria: |
A. Relationship.
The individual must either:
Live with the taxpayer for the entire year as a member
of the taxpayer’s household.
If not living with the taxpayer, be the taxpayer’s
"qualified relative."
"Qualified relatives" include a parent, grandparent, or other direct ancestor, or a
stepfather, stepmother, father-in-law, or mother-in-law. (A foster parent
is not a "qualified relative.") Any of these relationships that were
established by marriage are not ended by death or divorce.
B. Citizen or Resident
The recipient must be a U.S. citizen or resident, or a resident of Canada or
Mexico, for some part of the calendar year in which the taxpayer’s tax year
begins.
C. Support Test
Generally, the taxpayer must provide more than one-half of the individual’s
total support during the calendar year. Eligible support, whether provided
by the individual or the taxpayer, includes:
Food, shelter, clothing, medical care, and similar
benefits;
Benefits provided in-kind, such as the fair rental
value of in-law quarters in the taxpayer’s home; and
Social Security benefits, but not Medicare, Medicaid, or
private health insurance reimbursements.
Multiple Support Agreements
The support test is not necessarily failed if the
taxpayer contributes less than one-half of the individual’s total
support. As long as (1) the taxpayer contributes at least 10% of the
support, (2) no single person contributes more than one-half of the
support, and (3) the taxpayer and the other contributors as a group
provide more than one-half of the individual’s total support, then they
may agree among themselves as to which one of them will claim the
personal exemption for a particular calendar year.
The other contributors who have each contributed at
least 10% of the support must sign declarations renouncing the right to
claim the exemption. This is usually done on IRS Form 2120 (Multiple
Support Declaration).
NEXT:
Deduction for Long-Term Care Expenses
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