While most individuals are aware of the tax benefits available for taking care of their minor children, many are unaware that some of these benefits are available for taking care of adults. In some cases, these benefits extend to adults who are not your spouse. If you are one of the increasing numbers of individuals who have opened up your home to other adults, you may find the following tips helpful.
The adults for whom you can claim some tax benefits are not limited to your spouse and children. In fact, you may be able to claim tax benefits for your parents, your in-laws, friends or other non-relative individuals who you have supported during the year. Of course, the IRS has a set of specific requirements that must be met in order for you to receive any tax benefits for taking care of these individuals.
The IRS allows an exemption of $3,700 for each dependent for which you can claim on your tax return and reduce your taxable income. The following are some of the requirements that must be met, in order for you to be eligible to claim someone who is not your child as a dependent:
- You (and/or your spouse if you filed a joint tax return) must not be claimed as a dependent by someone else.
- You cannot claim someone as a dependent if that person is married and files a joint tax return, except in cases where the return is filed for the sole purpose of a tax refund and there would be no tax liability for that person and his or her spouse on separate returns.
- Your dependent must be a qualifying relative, as defined by the IRS.
- The person cannot be a 'qualifying child' of another taxpayer or your 'qualifying child.'
- The person must either (a) have lived with you for the entire year or (b) meets the IRS' definition of "Relatives who do not have to live with you."
- The person's gross income for the year must be less than $3,700, unless an exception applies.
- You must have provided more than 50% of the person's total financial support for the year.
- The person is not your maid, housekeeper or servant.
- In addition, the person must be a U.S. Citizen, resident alien, U.S. National, Canadian resident or Mexican resident, unless an exception applies.
Dependent Care Tax Credit
You may be able to claim a tax credit for up to 35% of your dependent's care expenses, if the expenses were paid so that you could work or look for work. For individuals other than your qualifying child or spouse, the person must not have been physically or mentally able to care for himself or herself, lived with you for more than half the year and either: (a) was your dependent, or (b) would have been your dependent except that:
- He or she received a gross income of $3,700 or more.
- He or she filed a joint return.
- You, or your spouse if filing jointly, could be claimed as a dependent on someone else's tax return for the year.
Tax Filing Status
Your tax filing status is used for purposes such as determining if you are required to file a tax return based on your income for the year, and the amount of income tax that you will owe (or tax refund you will receive). If you are single, you can use a more tax favorable filing status as head-of-household if you meet certain requirements.
The Bottom Line
These are just a few of the tax benefits available for individuals who take care of other adults. Bear in mind that these explanations are high level and other requirements may need to be met, or exceptions may apply. Consult with a tax professional regarding these provisions and your eligibility.