SSDI Support Test

[S T]

Taxpayer has a disabled son that in the past we have claimed as a dependent - age 37
no income in the past years.

In 2009 son applied for and received SSDI - Benefit was $ 15,732 (SSA 1099R)
Of which $ 2,585 was for attorney fees
and $ 7,644 was paid in 2009 for 2008 (retro).

Question when calculating for support, do I use the full amount of $ 15,732?

Sandy

[JG EA]

Not sure about the attorney fees - it was to collect support income so may not be support? Anyway count all the rest if it was spent on the dependent. If it was banked - No, do not count it.

[S T]

Support Calculation

Thanks JG,
In qualifying for support, that is one of my questions - can I remove the attorney fees from the SSA 1099R amount, (only for support calculation)

My other question because of retro amount to 2008 received in 2009 if I had to use that amount in the support calculation for 2009?

If I have to include the entire amount of the 2009 SSA 1099R form, it will disqualify the taxpayer from claiming the son as dependent for 2009, however, on projection for 2010, the son would qualify again in 2010.

I am thinking I have to use the entire amount since it is received all in 2009, but thought I would ask the question and see if someone else thought differently?

Sandy

[erchess]

Sandy

I think you do have to count all but the legal fees as support unless the taxpayer and son can explain that the money was somehow not used for support - for example if it was banked or given away or taken by con artists or whatever.

[taxea]

Whose ssn is on the 1099? How much of the atty fee was for obtaining the income? I doubt the full amount was deductible. If the ssi is coming in the son's ssn then why would any of it be deductible by the parents?

[JG EA]

Thanks JG,
In qualifying for support, that is one of my questions - can I remove the attorney fees from the SSA 1099R amount, (only for support calculation)

My other question because of retro amount to 2008 received in 2009 if I had to use that amount in the support calculation for 2009?

If I have to include the entire amount of the 2009 SSA 1099R form, it will disqualify the taxpayer from claiming the son as dependent for 2009, however, on projection for 2010, the son would qualify again in 2010.

I am thinking I have to use the entire amount since it is received all in 2009, but thought I would ask the question and see if someone else thought differently?

Sandy

It doesn't matter that the money was for another year. You start the support issue with how much was "in the bank", then what came in, and subtract what was left in the bank. Since the money was received by the dependent - it all depends on what out of the money was spent for her support.

I still think that a case could be made that the attorney fees could be viewed as non support money because it was spent to get support money. You could view it as not received by the dependent. It is however just a feeling - no hard facts. But the dependency worksheet does start with money that was there. So, couldn't you view it as NOT there?

[Black Bart]

Two years' S S A

Thanks JG,
In qualifying for support, that is one of my questions - can I remove the attorney fees from the SSA 1099R amount, (only for support calculation)

My other question because of retro amount to 2008 received in 2009 if I had to use that amount in the support calculation for 2009?

If I have to include the entire amount of the 2009 SSA 1099R form, it will disqualify the taxpayer from claiming the son as dependent for 2009, however, on projection for 2010, the son would qualify again in 2010.

I am thinking I have to use the entire amount since it is received all in 2009, but thought I would ask the question and see if someone else thought differently?

Sandy

I sympathize. It doesn't seem like '08 should have to be included since it's income from a different year, does it?

As JG says, while SSA is considered support furnished by the son, it is so only if actually used for the son's support. But that's a very "iffy" question since most people don't put it in savings -- it's just directly deposited in with "family" money and nobody can say what was spent for what. Still, I assume that if it ever came to it, IRS would say "The kid put $15K in the bank -- prove to me that you spent $15K plus one dollar on him" (almost impossible to do).

These judgment calls on such stuff tend to pop up a couple of times every year with somebody's SSA topping out near the "half" support upper limit. Sometimes it's so much that I have to throw it out; other times I figure they aren't spending it on the kid and go ahead and allow it. While I always worry about some IRS person looking at the SSA amount and saying "No way," I've never yet had one disallowed for this. Still, $15K is a healthy amount to worry about, so...what to do (wish somebody would come up with an aspirin-like "worry" pill)? I'd probably not claim him in this case.

I think JG's idea lawyer fee (never got to the bank) is an arguable fig leaf, but it was an indirect payment which probably would not survive the unlikely but possible questioning. These things are just no fun, are they?

[taxea]

What! Me Worry?

To Black Bart
Why do you worry this is not your issue...my standard line when asked, during the tax season, if I am really stressed is....,me? I don't stress. That is the client's job.