It’s been said that life comes full circle. Well, so do taxes.
It’s difficult to watch your parents grow old. The ones who supported you while growing up are now the ones you’re taking care of. You may be curious if you can claim your parents as dependents on your tax return like they once did for you.
The answer lies in the following five tests set up by the IRS:
#1. They must be related to you.
#2. They must be a citizen or resident of the United States, Canada, or Mexico.
#3. They must not be filing a joint tax return.
#4. They must have an annual gross income of less than $4,000.
#5. You must provide more than 50% of their financial support for the year.
With these qualifications in mind, let’s take a look at some special circumstances that might apply to you and your parents.
Can I claim my parent as a dependent if…
…they receive Social Security Retirement Benefits?
Yes. Your parent is receiving benefits for the time and effort they put in while on the workforce. This amount is not included in their gross income amount for the year. That means that Rule #4 above is still met even if their benefits come to more than $4,000 annually.
EXCEPTION: If your parent decides to go back to work after retiring, then that income could affect Rule #4 and Rule #5 above. Here’s how. If their income amount from the new job comes out to be more than $4,000 for the year, then you can not claim them as a dependent on your taxes. In turn, if they are providing more than 50% of their own support with the new job, then you cannot claim them as a dependent either.
…they receive Social Security Disability?
Yes. Millions of Americans each year enter into the Social Security Disability program because they are no longer able to work due to a medical condition. Disability is available to those whose condition is expected to last longer than 12 consecutive months (or already has). One can receive this benefit until they are either no longer disabled or have reached full retirement age.
EXCEPTION: You can claim your parent as a dependent on your tax return without their benefit being affected. However, Social Security benefits can limit any wage income they receive while on disability (ie: from another job they are employed with).
…they receive Supplemental Security Income (SSI)?
Yes. This is a program available to those who have a disability which makes them unable to work but don’t qualify for regular disability benefits. This also works a bit differently than the disability program mentioned above. While you can claim your parent on your return if they receive SSI, your 50% support may exceed their income requirement to qualify them for the SSI program in the first place. Why is that? It is a means-tested disability program.
…they have a job?
Maybe. This situation is becoming more and more common. Whether your parent is bored at home, needs the extra cash, or simply enjoys the workforce, they may have a new job. It’s important for them to realize that the income they are earning is taxable and now included in their gross income amount. When claiming your recently-employed parent as a dependent, you’ll need to keep in mind Rule #4 and #5 above. If their new job is earning them more than the $4,000 annual threshold, then you can no longer claim them as a dependent. If this also means that you are no longer providing 50% of their support, then claiming them is not an option for you. That being said, if you still pass the tests with flying colors, then enjoy your tax deduction!
Taxes can be confusing. So can Social Security benefits.
Combining the two can lead to hundreds of questions and one major headache. When the ultimate goal is to help out a parent who’s always cared for you, it’s tough to focus on money. However, if you fit the qualifications, then you’re entitled to a tax deduction. So let’s get down to filing that tax return. With RapidTax, our customer support team is ready to help you prepare those taxes; deduction or not.
I pay $500/mo P&I and Escrow for a House plus $500/mo for a vehicle that my father uses exclusively, so $1,000/month total. His ‘Pension’ is less than that, but combined with his SS, it is more than that, however, combined his income is less than $25,000, so his SS would not apply (?), so I pay more than 50% of his Non-SS income ($1,000 vs. $700). However, does his $700/month Pension income, which is $8400/year, exclude him as my dependent because it alone fails the Gross Income Test (?).
Have I been Munsoned (?)
Once your father’s annual gross income is over $4000, you will not be able to claim him as a dependent on your return.
My parents are receiving social security disability, I’m paying the mortgage so they can stay in the house. Because they live in my house and I pay the mortgage can I claim them as my dependents without them losing their social security disability?
Your parents social security disability benefits are not affected by a claim as a dependent on your tax return form. However if they are working, social security may limit the wages they earn from their payroll check that they receive while working with a disability with benefits. Rapidtax is a website you can use to file your tax return forms, and our customer service support is available to assist you through the process.
My mom gets social security but she still pays her mortgage, can she file taxes still if so how?
Your parent is required to file an individual tax return if she is receiving over the $4,000 threshold of income. If her only source of income is her social security benefits, she is not required to file an individual income tax return since it is non-taxable.
Keep in mind that if you are planning on claiming your parent, you must support her 50% financially, she cannot have income over $4,000 and you cannot claim her social security benefits.
Hi: my mom is on SSI and a part time caregiver for her. Am retired and also receiving social security benefits as well as my only son as my dependent since he is still in school. Can I claim my mother as well as my dependent for tax purposes. She’s also living with me and am filing as head of household. Any advice will be greatly appreciated
One of the IRS’s test to determine if you can claim your parent as your dependent on your return is “Your parent must not have gross income of $4,050 (in 2016) or more. Once your parent passes the IRS qualifying tests to be claimed on your return, her social security benefits will not affect you from claiming her since gross income does not include Social Security payments.
My elderly father does not live with me but I provide more than half of his expences can I claim him on my taxes? He gets social security 12000 per year.
SSI income is not counted as gross income. If your father only received $12000 of SSI and you provided 50% or more of his support for 2016, you may be able to claim him as a dependent on your return. You can use the IRS Interactive Tax Assistant to determine if you can claim your father based on your tax situation.