Can He claim Her as a dependent?

[BHoffman]

Long time unmarried couple living together. She has incurable cancer but is participating in a trial and is having good days and bad days. She is disabled. He works. No children. The house is jointly owned.

She has:
W-2 third party sick pay, (nontaxable) code J in box 12 $13,000.
Social security benefits $19,600. None is taxable.
Gross rental income on 1099 $9,900, net rental loss ($2,000). I think the $9,900 on the 1099 excludes her from be eligible to be his dependent
She has negative AGI of about ($1,500) and no tax liability.
I don't think she is required to file a tax return.

He has:
W-2 income $57,000 and AGI of $59,000.

Question:
Can He claim Her as a dependent? I'm concerned about the support test since she does receive money, but has no taxable income. She has about $5,000 in out of pocket medical expenses.

[Bob McCoy]

From the information you have provided it sounds like he can claim her. I reviewed the four tests and I don't see any that would disqualify the exemption. There is no wealth test, so a person could posses substantial assets, and technically be eligible to be claimed as a dependent.

I suppose The IRS could dig into their finances and have them prove support, and as long as they feel they can, then it should fly. That may be a big if however. Not sure how much time and effort The IRS would exert in this situation, but have to always consider the possibility of an audit and its consequences.

[BHoffman]

Hi Bob - I'm thinking that dratted 1099-Misc for $9,900 she got for rental income on a condo she owns probably disqualifies her as his dependent. That's the "gross" income, right? Even though the net effect was a loss.

I guess I just want to help them out.

[Bob McCoy]

I posted before you edited your post, which caused me to take heed after I saw the edited version, so I went back and read more about it, and found the definition of gross income in regards to rental income, and it looks like that is the disqualifying point. Here is what it said;

"Gross receipts from rental property are gross income. Do not deduct taxes, repairs, or other expenses, to determine the gross income from rental property".

Can never do to much research I guess.

[BHoffman]

You're quick to see that before my lightning fast CMA edit, Bob

[taxmom34]

but, she still files a return, gross rental income of $9900, IRS doesn't know what expenses for rental until return is filed.



Sorry, just assumed numbers were high enough for required filing, didn't pay attention to wording.

[BP.]

living together

Gross rental income on 1099 $9,900

Can He claim Her as a dependent?

She has about $5,000 in out of pocket medical expenses.

I just want to help them out

Will this help?

Fail on the gross income test, but if you determine they'll pass the support test, he could deduct her medical expenses.

Pub 17, p. 143-144. Paraphrase- Deduct medical expenses for someone who would be your dependent except for the gross income test.

[BHoffman]

Thanks BP! I'll look into that