$500 Non Refundable Credit for Other Dependent

[jmcdtax]

Caution: If you follow the steps on pages 20, 21, 22 of the 2018 IRS 1040 Instructions, if the other dependent had a gross income of $4150 (personal exemption amount even though there is no exemption for 2018) or more, the TP does NOT qualify for the credit. I think that fact is being overlooked by some. Correct me if I am wrong.

[BP.]

if the other dependent had a gross income of $4150 . . . or more, the TP does NOT qualify for the credit.

P. 21 of the 1040 instructions- Gross income test applies to QR's, but not QC's (Step 3, #3, 'No' checkbox instructions), so QR's already fail the QR test for dependency with income of $4,150. If not a dependent, no ODC would be calculated.

[jmcdtax]

We agree QR (Qualifying Relative, other dependent, living with TP for full year) does not qualify because of making $4150 or more.

[TaxGuyBill]

We agree QR (Qualifying Relative, other dependent, living with TP for full year) does not qualify because of making $4150 or more.

So that person is NOT a Qualifying Relative or a dependent because they make more than $4150.

[Dude]

Where this gets confusing is at TYPE of income. Normally adults claimed by an unrelated other adult have some type assistance. If it is Social Security (even if not taxted) it is counted if it is some untaxable assistance it is not. So this begs the question: how can one claim they are supporting someone who gets Medicaid, food stamps, free bus service? Is the fact that you provide them a place to sleep enough?

[spanel]

Where this gets confusing is at TYPE of income. Normally adults claimed by an unrelated other adult have some type assistance. If it is Social Security (even if not taxted) it is counted if it is some untaxable assistance it is not. So this begs the question: how can one claim they are supporting someone who gets Medicaid, food stamps, free bus service? Is the fact that you provide them a place to sleep enough?

Have to add all that up. Must provide over half of their support.

Chris

[TAXNJ]

TTB 3-12

Gross income. For purposes of the dependency rules, gross income is all taxable income before adjustments and deductions including:

• Schedule C income less cost of goods sold. Other Schedule C deductions do not reduce gross income.

• Gross receipts from rental property. Do not deduct taxes, repairs, or other expenses.

• Partner’s share of the gross, not the net, partnership income.

• Taxable unemployment compensation.

• Taxable scholarships or grants.

Gross income does not include:

• Tax-exempt income.

• Nontaxable Social Security benefits.

• Income received by an individual who is permanently and totally disabled for services performed at a sheltered workshop. Income must come solely from activities at the workshop that are incident to medical care. Sheltered workshops are schools operated by tax-exempt organizations that provide training designed to alleviate disabilities.

[Dude]

TTB 3-12

Gross income. For purposes of the dependency rules, gross income is all taxable income before adjustments and deductions including:

• Schedule C income less cost of goods sold. Other Schedule C deductions do not reduce gross income.

• Gross receipts from rental property. Do not deduct taxes, repairs, or other expenses.

• Partner’s share of the gross, not the net, partnership income.

• Taxable unemployment compensation.

• Taxable scholarships or grants.

Gross income does not include:

• Tax-exempt income.

• Nontaxable Social Security benefits.

• Income received by an individual who is permanently and totally disabled for services performed at a sheltered workshop. Income must come solely from activities at the workshop that are incident to medical care. Sheltered workshops are schools operated by tax-exempt organizations that provide training designed to alleviate disabilities.

But if someone has gross income as defined above under 4150 but still takes in say $10k in untaxed support are you really providing over 50% of the support if your income is say $25k? This is the grey area that always gets me wondering.

[Dude]

There is a difference between items considered for the "gross income" test versus items considered for the "50% support" test.

Thanks, that clears it up

[Rapid Robert]

But if someone has gross income as defined above under 4150 but still takes in say $10k in untaxed support are you really providing over 50% of the support if your income is say $25k? This is the grey area that always gets me wondering.

Income and support are two independent things. You can have no income and yet be 100% self supporting; conversely you can have $100K of income but put it all into savings and have someone else pay 100% of your support.

[TAXNJ]

But if someone has gross income as defined above under 4150 but still takes in say $10k in untaxed support are you really providing over 50% of the support if your income is say $25k? This is the grey area that always gets me wondering.

As many tax preparers know, the Gross Income test and Support Test are some of the Dependency Tests.

For the original post, one good reference for Dependency Tests for 2018 is TTB starting at 3-10