How to claim a parent as a dependent on your tax returns?
The Tax Cuts and Jobs Act made major changes to the tax law for dependent exemptions. The following are few important key points for claiming dependents on your tax returns.
2018 Tax law changes
Under the 2017 tax law, you could claim $4,050 for every dependent on your tax return.
Under the new 2018 tax law, all personal and dependent exemptions have been suspended for years 2018-2025.
You can take $500 as a tax credit for non-child dependents. Tax credits are a direct $ to a $ reduction from the total taxes due. Eg: If your total tax due was $1,000 & if you are claiming 1 dependent your net tax due will be $500.
Key steps to determine if you can claim a parent as a dependent
- Relationship test: the dependent should either live with you all year or be related to you. The following are the list of relatives who don’t have to live with you.
A person related to you in any of the following ways doesn’t have to live with you all year as a member of your household to meet this test.
- Your child/ foster/stepchild, or a descendant of any of them (for example, your grandchild). (A legally adopted child is considered your child.)
- Your half brother, half sister, stepbrother, or stepsister, brother, sister,
- Your mother, grandparent, father, or other direct ancestors, but not foster parent.
- Your stepfather or stepmother.
- A son or daughter of your brother or sister.
- Daughter or son of your half brother or half sister
- A sister or brother of your father or mother.
- Your mother-in-law, brother-in-law, or sister-in-law, son-in-law, daughter-in-law, father-in-law.
Any of these relationships that were established by marriage aren’t ended by death or divorce.
2. Gross income test (2018): To meet this test, the dependent person’s gross income must be less than $4,050.
3.Support test (2018): To meet this test, you must provide for more than half of the support for your parent for the year. Support includes food, clothing, lodging, medical care, transportation and other requirements.
4.Tax return: You parent should not be filing a joint return. If she/he is filing a joint return only to claim a refund, then you can still add them as a dependent on your tax return.
5. Residency: Your parent must be a citizen or resident of the United States or a resident of Canada or Mexico.
If you are still unclear about your eligibility to claim dependents on your tax returns, contact a tax professional or us via our contact form.
Resources: Publication 501 from IRS.GOV