Is He a Dependent

[Maria]

Hello,

This is a new client. They have been claiming their sons as dependent on their return. One son is 45 years old and the other 43. I am thinking both sons are disabled.

During 2006, the elder son received $10,200 social security benefits. Can he still be claimed as dependent on his parents' return? I know the gross income limit was $3,300 but social security benefits are deemed tax exempt income? I am looking into Pub 501.

Thanks.

[solomon]

He meets the gross income test so that one is okay. Assuming the parents provide more than one half of his support, then the dependency is okay as a QR. If you are thinking QC, then you should require to see a written medical certification of total and permanent disability, but the son must not provide more than one half of his support.

[Uncle Sam]

Is He a Dependent

The sticking issue is - whether the child is "Permanently and Totally Disabled".
You meet the other tests, and you're correct about the Social Security.
TTB, P. 3-15.

[Golden Rocket]

Raw Dollar Support

Maria, taxability of social security or anything else has to be thrown out the window for support issues.

Did the parent furnish over 50% of the child's support? In particular, since the elder son received $10,300 in benefits, the test for dependency would require that the TOTAL amount required to support him must be over $20,600. Otherwise how could the parent furnish over 50%?

There are a few elaborate arguments that can defeat the reasoning above. For example, the son could be salting away large portions of his SS disability, which in theory reduces the amount spent on his support. But my experience is that this rarely happens.

[Maria]

I Guess Son is Still a Dependent

Thanks for every one's input.

I guess the son is still a dependent, since mortgage payments can be counted towards support. They have huge mortgages payments. Parents' business went downwards during 2006 so that they have to refinance again to take out cash. Not surprised, another carry back to do.

I don't feel comfortable to ask if the son is "totally and perm. disabled." I was wondering how he could receive social security benefits, did he work previously or the benefits are derived from parents.

Thanks again.

[solomon]

"I don't feel comfortable to ask if the son is "totally and perm. disabled."

Don't ask then. Treat him as a QR. Disability has nothing to do with a QR - only a QC.

[ChEAr$]

What's that about mortgage payments?

Thanks for every one's input.

I guess the son is still a dependent, since mortgage payments can be counted towards support. They have huge mortgages payments. Parents' business went downwards during 2006 so that they have to refinance again to take out cash. Not surprised, another carry back to do.

I don't feel comfortable to ask if the son is "totally and perm. disabled." I was wondering how he could receive social security benefits, did he work previously or the benefits are derived from parents.

Thanks again.

Mortgage payments as an item of support? Look again, particularly at Tax Book, page
3-19 which affirms what the rule has been every since I can remember, i.e.
it's fair market value of the lodging. IOW, what would the house rent for on the open
market?

[RLymanC]

Support

See the worksheet in Pub. 17 page 32 Line 1. That line clarifies SS Income.

I built a spreadsheet of this worksheet, works great for the above problem, just enter the numbers and the spreadsheet does the rest.