question regarding "dependent" and "Qualifying Persons"

[waywardinparis]

I have a friend - no, really, it's a friend... I have a friend whose life partner, after 20 years, has become completely disabled, receiving SS disability, and who has not contributed at all to the household in well over a year. Is she, or is she not a "Qualifying Person", enabling her partner to file Head of Household and claim her as a dependent? I have read the rules in IRS Pub. 501, but they are vague in this area...

"To be your dependent (defined earlier), a person must be either your qualifying child (defined earlier) or your qualifying relative. Generally, a person is your qualifying relative if that person:
•Lives with or is related to you,
•Does not have $3,300 or more of gross (total) income,
•Is supported (generally more than 50%) by you, and
•Is neither your qualifying child nor the qualifying child of anyone else."


In which case, her domestic partner does fulfill the requirements.

Does anyone have first hand knowledge on this?

[Koss]

Qualifying Relative

I have a friend - no, really, it's a friend... I have a friend whose life partner, after 20 years, has become completely disabled, receiving SS disability, and who has not contributed at all to the household in well over a year. Is she, or is she not a "Qualifying Person", enabling her partner to file Head of Household and claim her as a dependent? I have read the rules in IRS Pub. 501, but they are vague in this area...

For Head of Household, the qualifying person must be related to the taxpayer by one of a list of qualifying relationships. You cannot claim HoH status for a dependent that has no legal or blood relationship.

On the fact pattern you are describing, the taxpayer may be able to claim the disabled partner as a dependent. That's different from using Head of Household filing status.

To claim her as a dependent, the taxpayer must have provided more than half of the person's support. And that may well be the case for the couple you describe.

But you said she's receiving SS disability. Where's all that money going?

If the disabled person is receiving, say, $9600 per year in social security benefits, and her partner only had income of, say, $14,000 for the same year, then it doesn't look very likely that the working partner provided more than half of the total support for the disabled person...

All the other criteria are met. But you gotta look at the support issue carefully.

IF the return was audited--and that's a big IF--the IRS rep really will start looking at everything: rent, utilities, groceries, gas, entertainment, prescription medicine, clothing...

if it's even there to look at.

I'm not trying to scare you. But when you take a dependent exemption under these circumstances, if the IRS challenges it, you bear the burden of showing that you provided more than half the person's support. It's not a criminal case. You are not "innocent until proven guilty." The IRS doesn't have to prove anything. They can simply disallow the dependent exemption if you can't provide any evidence to support it.

Burton M. Koss
koss@usakoss.net

[waywardinparis]

Thanks - I wasn't clear on the distinction between claiming her as a dependent and filing head of household...

She does, in fact, receive a healthy SS disability, however, that income is clearly earmarked for medications, medical expenses and previous debts. The other partner makes a considerable amount more and can prove total household autonomy where the expenses are concerned.

Her delimma came when her eldest son became financially independent and left home - leaving her with a sizable income, equally sizable expenses, and no "head of household" or dependent. I suggested to her that she might be able to claim her partner, as she is most definitely supporting her financially. Am I wrong?

[Gene V]

If you are reading from Table 2-1 2006 Pub.17 or 501 Who is a Qualifying Person Qualifying You To File as Head of Household?

Then you must read footnote 7 (A person who is your qualifying relative only because he or she lived with you all year as a member of your household is not a qualifying person.

Table 2-1 in the 2007 Pub.17 or 501, eliminated footnote 7. and replace the wording under AND in the table with (he or she lived with you more than half the year, and he or she is related to you in one of the ways listed under Relatives who do not have to live with you in Chapter 3.

If you pass all the other test for dependency, you still fail this test for Head of Household.

[Koss]

No Head of Household

Thanks - I wasn't clear on the distinction between claiming her as a dependent and filing head of household...

She does, in fact, receive a healthy SS disability, however, that income is clearly earmarked for medications, medical expenses and previous debts. The other partner makes a considerable amount more and can prove total household autonomy where the expenses are concerned.

Her delimma came when her eldest son became financially independent and left home - leaving her with a sizable income, equally sizable expenses, and no "head of household" or dependent. I suggested to her that she might be able to claim her partner, as she is most definitely supporting her financially. Am I wrong?

Gene, in his post below, is confirming what I said in my first post. You can't use Head of Household status for a dependent that is not related to you at all. So the answer is NO for Head of Household.

Again, it sounds like the working partner may well qualify to claim the disabled partner as a dependent. But in your last post, you appear to be confusing the household expenses with the question of support for the disabled partner.

To qualify for Head of Household, you have to have a dependent that is related to you, and pay more than half the cost of keeping up the home.

To claim a dependent exemption in this scenario, you have to pay more than half of the total support for the person.

Half of a person's support is not the same as half the cost of keeping up the home.

The "household expenses" are irrelevant; your working partner does not qualify for Head of Household.

Okay, I'm a liar. The household expenses are relevant to the extent that half of some of those expenses, such as the electric bill, might be a form of support that the working partner is providing to the disabled partner...

BMK

[waywardinparis]

Thank you very, very much!

Thanks for clarifying that for me, I really appreciate it!

Maybe claiming her as a dependent, and I think that she can based on what you've explained - more than half of total support, will lessen the blow of losing head of household.

Thanks so much for your help!

[FEDUKE404]

HOH restrictions

Bottom line is Congress in recent years removed the possibility of many folks continuing to claim head of household filing status as they had for some time.

The classic example is the "not-yet-empty-nester" single parent with an adult working child still living at home (not claimed as a dependent). The parent still pays all of the extra household expenses, similar to what would be paid at age 19 while the kid is in college, but now loses the favorable filing status due to the "qualifying relative" issue.

I guess Mom/Dad should start charging rent, etc to ease the higher tax bite??

FE

[RLymanC]

Support test

Wouldn't the medical and medication expenses count as money provided for the persons own support.

Sounds a though there might be quite a bit of SS income used for that purpose and could possibly disallow dependent exemption.

[Kram BergGold]

Key to support

For the dependency test, asuming the taxpayer owns the home, the big support item is the FMV of the space in the house used by the disabled person. You do not use the actual expenses for keeping the house up. Fair market rent is usually much higher than actual expenses. In your case lets say SS disability is $15,000 and all used for support. Then the taxpayer has to show he or she provided more than $15,000. I would look to FMV rent, utilities, food and whatever else was provided.