Can Mom be a dependent

[Kram BergGold]

My client wants to claim mom as a dependent. Mom has $11,000 of Social Security income and $3,000 of pension income, total $14,000. My client wants to give Mom a sum of money before the end of the year to show that he provided more than 50% of Mom's support. Clearly this sum on money will not be spent by year's end. Rather it will end up in the bank. Can this be done? To me $8,000 would be enough to show more than 50% of support. However do I need to concern myself that the $8,000 in the bank is my clients? Or is it just, total dollars available, $22,000. Less $8,000 not used for support = $14,000. My client provided $8,000. Mom provided $6,000. Therefore, Mom is a dependent. The more I think about it the more I think this is OK!

[Black Bart]

Minding Mom

The more I think about it the more I think this is OK!

Gosh, we must be on different trains of thought because, the more I think about this, the more is seems to me to be a (sorry) transparent ruse.

[veritas]

If it ain't

spent it's not support.

So he wants to give his mom $8000 so he can take a $4000 exemption?

[WhiteOleander]

I think you need to do a dependency worksheet. See what exactly it took to support the Mom for the year.
Then, see if son provided more than 1/2 of that support.

Even though the Soc Sec does not count for the gross income test, it does come into play for the support test.

Just moving money around does not prove how much went out for living expenses.

[Black Bart]

Givin' Kram kredit

Still...this sounds like the kind of scheme one of my clients would come up with and I would/possibly/might/maybe go along with if...hmm...what?

Good point - the dough's in the bank
Bad point - it's unspent
Good point - since it's unspent, there's traceable proof she got it from him
Bad point - it will be done in the last few days of the year (not enough time to be material even if some of it had been spent)
Debatable point - Old CPA told me about this long ago, but I can't remember if he said if it was good or bad to be in the bank -- I'm thinkin' it's not supposed to be there, but maybe that's where White Oleandaer's worksheet comes in.

Note to Veritas: With luck he inherits it back later.

[Black Bart]

Example

Here's something from 2005 IRS Publication 501 which I think kills this idea. The example's reversed (it's about Mom's money), but the principle seems to be the same.

"Example: Your mother received $2,400 in social security benefits and $300 in interest. She paid $2,000 for lodging and $400 for recreation. She put $300 in a savings account. Even though your mother received a total of $2,700, she spent only $2,400 for her own support. If you spent more than $2,400 for her support and no other support was received, you have provided more than half her support."

From that I take it that it's all about how much she spent for her support, regardless of the source.

[Taxref]

I agree with the conclusions above. Money which is not actually spent on support (check what kind of expenditures actually count as support before sending Mom on a cruise) does not count toward the 50% test.

[Kram BergGold]

To White Oleander

You are correct. The design of teh dependency support worksheet eliminates the possibility of doing what my client wants to try. It says what was available for support. How much of this did taxpayer provide. In my case taxpayer provided 100%.
Thanks.

[Black Bart]

Hey Kram,

I pre-apologized (said I was sorry) for callin' your scheme a "transparent ruse" and besides, that 501 pub example was good intel. Where's my kredit? I don't know who's touchiest -- us, or you Yanks.

[WhiteOleander]

You are correct. The design of teh dependency support worksheet eliminates the possibility of doing what my client wants to try. It says what was available for support. How much of this did taxpayer provide. In my case taxpayer provided 100%.
Thanks.

Glad I was able to help. In the last couple of years with the changes they have made to the dependency rules, I think it is one of the most confusing parts of the code.