Dependents and Deductions: Writing off the Cost of Supporting Adult Children and Elderly Parents

27 Mar

Providing support for an adult child or elderly parent is an addition to your financial burden—but it can also be a deduction from your taxes. The IRS permits taxpayers to claim adult relatives (and non-relatives who live with the taxpayer) as dependents on their tax return for a write-off of up to $3,700.

These days, that’s a useful tax tip for many Americans (Credit’s due to The Wall Street Journal, which recently brought the deduction to greater attention for tax season). With unemployment high, many kids graduating from high school or college can’t find jobs, so they’re staying reliant on Mom and Dad. Meanwhile, many members of the huge Baby Boomer generation are aging and becoming dependent on their grown children. Census Bureau statistics show that 59 percent of men ages 18 to 24 and 50 percent of women in the same range live with or are supported by their parents (Those figures were 53 percent and 46 percent in 2005). The statistics also show that 43.5 million Americans care for somebody older than 50 (28 percent more than in 2004).

Does your family make up part of those stats? You might qualify for this tax deduction.

To claim the deduction for an adult child (including a stepchild or eligible foster child):

  • You must have provided more than half the child’s financial support in the tax year
  • The child must have lived with you for at least six months of the year (temporary absences like attending college may be disregarded)
  • The child must have been under age 19 on Dec. 31, or ages 19 to 24 but a full-time student
  • The amount of the deduction may comprise the costs of the child’s college, food, clothing, haircuts, recreation, weddings and medical and dental care, as well as the child’s prorated share of the mortgage, utilities and other household expenses

To claim the deduction for an adult dependent such as an elderly parent:

  • You must have provided more than half the dependent’s financial support in the tax year
  • The dependent’s gross income, minus Social Security benefits and tax-exempt income, must have been less than $3,700
  • The dependent must be a U.S. citizen or a legal resident of the United States, Canada or Mexico
  • The dependent must not have filed a joint return or claimed him or herself on a tax return
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