Client has a 24 year old son who is mentally handicapped. Son is able to work and earned $21,000, but would not be able to function out on his own. Due to income and age, in general he would not qualify as a dependent. Can I use code "O" for other dependent on the info worksheet and would that fly or is there another way to indicate that he is handicapped? (I use ProSeries.) Thanks.
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Sandy >^..^< -
Disabled child still qualifies as child but his own income will probably kick him out if he provides over 1/2 of the support by himself. -
Can't be claimed as a dependent
I respectfully disagree with Gretel and hold that the son in these facts cannot be a dependent period.
To be a qualifying child he would have to be "permanently and totally disabled". They are looking for such things as incontinence and the inability to change own protective pads or at least the inability to go to the toilet without assistance, inability to dress self, inability to feed self, the need to have a care giver present every minute (because of danger to self or others or physical problems such as imminent risk of cardiac arrest or breathing stoppage) the inability to work other than at a sheltered workshop, and so on. I am quite sure that an auditor who knows how much the son made will find a reason and be backed by the courts, to deny this status. Really a person who can work 20 hours a week in a fast food restaurant or in construction for minimum wage will not be certified as disabled.
To be a qualifying relative he can't have over $3,500 of income, period end of story.
There is however one tax savings that may help. In general, if you have in your household someone you could claim as a dependent if they made less than $3,500 then you can pay their medical expenses and deduct those on your Sch A as if they pertained to you. I find that this is an often overlooked savings.
I feel for the family in this case because the young man is not making and is not likely to ever make enough to cover his cost of living even at poverty level but he has too much earning capacity to qualify for any kind of government assistance I know of.Last edited by erchess; 02-04-2009, 06:04 PM.Comment
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Thanks, erchess. That was generally my feeling on the situation. The son works as a clerk in a job that will go nowhere. My main concern was age and income. Unfortunately, I think I was right, but I wish I could be wrong.Sandy >^..^<Comment
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Erchess
Would not the definition of "permanently and totally disabled" be the same for dependency as they are for 1040 Sched R?Originally posted by erchess View PostComment
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But the questions remains
Is he totally and permanently disabled? Unfortunately, I have to agree that he is not. If he is able to hold down a job and make $21,000 a year, that would seem to argue against "totally." Permanently, that may be another question. But since he is able to partly care for himself, that would seem to be a qualifier.Sandy >^..^<Comment
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A disabled person is allowed an income if they work for a facility that qualifies. Pub 17. Can still be considered a dependent. taxeaBelieve nothing you have not personally researched and verified.Comment
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My Understanding
Taxea what you said is true but I don't think it applies. I think the "alleged dependent" has a private sector job. People in sheltered workshops do not earn $21,000 a year.
Lamil as far as I know "permanently and totally disabled" means the same thing for all tax purposes and I think that for all those purposes you are not disabled if you can work even 20 hours a week at a minimum wage job. You get told you have to live on that. However my earlier post that you referenced is in error. When I talk about toileting dressing and so on I was coming from the standard of "incapable of self care" which applies to a dependent over 12 for whom the taxpayer wants the child care credit. That standard does not apply claiming the dependent. However I stick by my overall conclusion that this guy earns too much money to be considered disabled.Last edited by erchess; 02-05-2009, 03:12 AM.Comment
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1040 Sched R definition:
A person is permanently and totally disabled if both of the following
apply.
1. He or she cannot engage in any substantial gainful activity
because of a physical or mental condition.
2. A physician determines that the disability has lasted or can be
expected to last continuously for at least a year or can lead to death.
When I am in doubt or expect the IRS to be in doubt I have the client furnish a signed statement from the doctor that BOTH of above statements apply.Comment
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Lamil I agree completely
but with the proviso that if the person can pull 20 hours a week in a minimum wage job (sheltered workshops do not pay minimum wage) then they are not unable to engage in any substantial activity in the eyes of the law.Comment
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The client worked as a clerk for a major drugstore chain. I don't know how many hours a week, but since he made as much money as he did, I don't really see how he can qualify as a dependent but wanted some other opinions.Sandy >^..^<Comment
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Erchess...that's why I posted "if they work for a business that qualifies". Pub 17 is clear on what qualifies and I believe in letting preparers do there own research before posting an obvious question. taxeaBelieve nothing you have not personally researched and verified.Comment
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I have
a current client with a 42 year old "totally disabled" but yet holds down a job and earns about $7,000/yr. She does work for a company that sells light bulbs. We were audited several yrs ago and had to "prove" she was totally disabled. Mother was claiming daughter and filing as HOH. We received a MD's letter stating exactly that. Keep the letter in the clients file.
I would really examine the situation since $21,000 is 3x what my client earns.
LarryComment
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resource is TTB 3-19...under permanetly and totally disabled and gross income, last bullet taxeaBelieve nothing you have not personally researched and verified.Comment
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