Claim Exemption? Daughter has no wages.

[zeros]

Daughter has no wages but receives SSI ($400 per month). She is 25 years old. Can Mom claim her as an exemption? I believe daughter would be considered disabled.

[jimenright]

maybe not

Mother would have to pay over half of support thus support must be double the SSI payments or $800 per month.

[Koss]

Qualifying Child

If the daughter:

(1) is the biological child of the taxpayer,

(2) lived with her for more than half the year,

(3) is under age 19, or under age 24 and a full-time student, or any age if disabled, and

(4) did not provide more than half of her own support,

then she is the qualifying child of the taxpayer.

SSI is not considered support provided by the child. It is treated as support provided by the government. It is a form of welfare, similar to food stamps or subsidized housing.

BMK

[Koss]

Support

Jimenright wrote:

Mother would have to pay over half of support thus support must be double the SSI payments or $800 per month.

Not so if the daughter is disabled. Under the rules for qualifying child, the parent does not have to provide any support at all. The criteria is that the child cannot provide more than half of her own support. SSI is not treated as money the child is using to support herself. It is support from the government.

Also--

Even if the daughter was providing $400 per month of her own support, the mother would not need to provide $800 per month of support for the daughter.

To meet the "more than half" test for a qualifying relative, the mother would need to provide a total of $4801 in support during the calendar year. That's a lot less than $800 per month.



BMK

[jimenright]

support test required

The support test is required for all dependents (see grid TTB pg 3-15) If not a wealty individual could be claimed as a dependent.

See support test grid on pg 3-20 of TTB to determine what qualifies as support.

If the mother paid $400 monthly and the child $400 monthly the total support would be $800 monthly.. This could be, but maybe not. If the mother paid less than half the support, she could not claim the child as a dependent. If someone else paid the support, It does not count as support provided by the mother or the child.

If the child is PERMANENTLY AND TOTALLY disabled, The mother could claim the child as long as the child does not pay more than 1/2 of own support.

[Koss]

Support

The support test is required for all dependents, but there are two different support tests. The support test for a qualifying relative is different from the support test for a qualifying child. This is why there are two columns on page 3-15 of TTB..

For a qualifying child, the parent is not required to provide any support at all. The test states that the child must not provide more than half of his/her own support. It does not require any amount of support from the parent claiming the child. See page 27 of IRS Publication 17.

Page 3-20 of TTB states that benefits provided by the state, such as food stamps and SSI, are considered support provided by the state, and not by the person receiving the benefits. SSI is not the same as social security. A person receiving SSI is not considered to be using that money to support herself. It is support from the government. If she has no other income, then clearly she is not providing more than half of her own support.

Jimenright wrote:

The support test is required for all dependents (see grid TTB pg 3-15) If not a wealthy individual could be claimed as a dependent.

Wealth has absolutely no bearing on whether one may claim a dependent exemption. A wealthy individual can be claimed as a dependent under certain circumstances. Wealth, income and support are three totally different concepts.

For example:

Taxpayer’s son is 20 years old. Taxpayer is the biological mother. The 20-year old lived in the taxpayer’s home for the entire year, and was a full-time college student for 9 months.

Back when the 20-year old was only 18, he won the lottery. He now has four million dollars in the bank. During 2009, he did not use any of that money. He simply left it in the bank. Other than the interest, he had no income during 2009. He did not withdraw or spend any of the interest.

All of his living expenses and his college tuition were paid by the parent.

This wealthy 20-year old is the qualifying child of his mother.

Not only is he a dependent of his mother, but if her income is low enough, he is also her qualifying child for the earned income credit.

Unlikely? Yes. Impossible? No. Wealth, assets, and income are not part of the tests for a qualifying child.


BMK

[michelh]

third party support

SSI is considered third party support and can affect the ability of a parent to claim the child. Just like third party support can affect the head of household status to single status. The parent may still be able to claim for EIC but may lose for dependency. Other types of third party support that interfere in filing status and dependency claims are section 8, hud, food stamps, rental assistance, energy assistance, state provide health assistance, child support, and even gifts. A parent has to provide over 50% of the annual support for a dependent in order to get the dependent exemption. Third party support is allocated by to whom the intended recipient is even if issued in a parents name.

[jimenright]

I'm wrong

I will have to back off on claiming that a disabled child on SSI could not always be caimed as a dependent. I looked at the requirements for claiming SSI. If an adult recieved SSI, the requirements are such that the person would be unable pay over half of thier own support.

[Black Bart]

You may as well throw in the towel, Jim.

Burton generally knows whereof he speaks and he's right about the support -- although you were right up until a couple (maybe more) of years ago. I, too, was still laboring under the "old" rules for quite some time until a Koss-class poster wised me up (I just hate readin' new instructions, don't you?).

Take a look at that two-column chart and check out the support requirements for (1) Qualifying Child and (2) Qualifying Relative. They're different.

Surprising ain't it? I myself was flabbergasted to know what I didn't know about such new-fangled stuff, but console myself that many of my previously victimized clients were/are already soaking the government anyway (I know it's a thin reed to hang your hat on, but it's all I've got).

Anyway, it's mucho helpful 'cause if one shoe won't fit, then you've got a spare to fall back on (with the exception that the QR status does require T/P to pay over half support).

Chin up and trudge on.

[Koss]

Support

michelh wrote:

A parent has to provide over 50% of the annual support for a dependent in order to get the dependent exemption.

That is the support test for a qualifying relative. The support test for a qualifying child is very different.

For a qualifying child, a parent is not required to provide any support at all. The rule says that the child cannot provide more than half of his own support. It does not matter where the support is coming from, as long as it is not coming from the child himself.

There are two types of dependents: qualifying child and qualifying relative. The support test for a qualifying child is not the same as the support test for a qualifying relative. This is why page 3-15 of The Tax Book has two columns. Also, see the chart on page 27 of IRS Publication 17.

For a qualifying child for EIC, there is no support test at all. For EIC, the tests are age, relationship, residency and joint return.

BMK

[WhiteOleander]

Just as a side note, I think it would be less confusing if the IRS would use the term Qualifying PERSON instead of qualifying relative. Sometimes the person is not a relative and this causes confusion.

[BP.]

it would be less confusing if the IRS would use the term Qualifying PERSON instead of qualifying relative.

Wouldn't that be nice . . . but in the interest of obfuscation and opacity, the HOH rules have already called dibs on the term "Qualifying PERSON."

[taxmom34]

michelh

you need to go back and read this thread again, all of it and especially comments by Koss and Bart.

[Davc]

Just as a side note, I think it would be less confusing if the IRS would use the term Qualifying PERSON instead of qualifying relative. Sometimes the person is not a relative and this causes confusion.

I suppose you also think a qualifying child should be the child of the person claiming them.

[Bees Knees]

Just as a side note, I think it would be less confusing if the IRS would use the term Qualifying PERSON instead of qualifying relative. Sometimes the person is not a relative and this causes confusion.

An oldie but goodie from the 2005 tax year edition of TTB, page 25-5:

Uniform Definition of Qualifying Confusion

You have to wonder if there’s a particular, twisted personality trait held as a minimum requirement to become a tax law writer. It would be easy to believe a conspiracy of intentional deception by those who delight in toying with gullible emotions of We Who Yearn for Clarity. Time and again, we’re enticed by the promise of relief from burdensome complexity. When optimism is at its peak, our spirits are crushed by layer upon layer of convoluted compliance requirements. In reality, we all know that the people who write tax law are as kind and decent as anyone else. Perhaps they’re a little shorter on average, with a more peculiar sense of humor, but they’re kind and decent nevertheless. Think of it this way. Tax law writers provide a never-ending source of perplexity as the spice of a tax professional’s life. Or maybe a habanero pepper?

Let us recognize some of the contributions that tax law writers make to ensure our lives as tax professionals are never dull or predictable.

Uniform Definition of Qualifying Child? O.K. So it’s not uniform. And it’s a set of restrictions, not a definition, at least not to anyone of normal height. But it sure sounded good at the time. As we rushed to watch this grand idea materialize, we found that the uniform definition was actually a nonuniform scramble, sort of a Rubik’s Cube for tax professionals. Indeed, IRS Publication 501 uses the term “Qualifying Person” for head of household status, which could mean a Qualifying Child, or a Qualifying Relative, or a child who is Not a Qualifying Child but still qualifies Mom for head of household filing status. One can only guess how the uniform definition got its start. Someone in the tax law writing department got stuck one day running around shouting “Qualifying, Qualifying” all day long. Anyone can write a law like this. Just discuss something and insert “qualifying” every few words. Your final qualifying product will sound like a great qualifying idea to anyone who is not paying qualifying attention. Did I mention the part about the tax writers’ family trees?

Depreciation recapture. Is it possible to recapture something that was never captured? If you think that’s a tough question, how do you unrecapture something that cannot be recaptured in the first place? Yes, the people who write this stuff are serious. Imagine calling your neighbor and telling him his cows are in the cornfield. You’ll be glad to help him capture his cows, for a fee of course. If a captured cow needs to be recaptured, you’ll waive your fee. However, if you accidentally unrecapture any of his captured cows, your recapture fee will be set at a higher rate. As you and your neighbor argue terms, the cows find their own way back into the pasture. This has an analogy to taxpayer compliance issues, honest.

Paperwork Reduction Act. This one WAS a joke. They’re still laughing about it today.

Alternative Minimum Tax. A mandatory maximum tax. This brilliant idea was set up to nab a couple of millionaires in the 60’s who weren’t paying any taxes. Now it’s in the face of just about everybody who walks through your door. Got a mouse? Trigger a trap with three sticks of dynamite. When the roof blows off your house, just say the mouse repellant’s working.

Earned Income. This is not income earned. Well, it is sort of, but only from a narrow perspective. Earned income is a specific category of income that is earned, and is often related to use of property that is not used for the production of income. Well, property not used for the production of income is sort of used for the production of income, but not from the perspective of actually being in the category of income-producing property. Oh, never mind.

Tax Simplification. The next time you hear this term, whether from the guy down the street, from a member of Congress, from the President, or from anyone else, instantly blurt out a good belly laugh. You’ll appear hip to the joke, your friends will consider you in-the-know, and best of all, you’ll be able to finish the phrase appropriately and plan accordingly. If you’re qualifying, you may even find yourself being recruited as a tax law writer.