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.
Eligible Adults
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.

Related Articles
  1. Professionals

    Why the Wealthy Shy Away from Inheritance Talk

    A recent survey of high-net-worth individuals shows that many avoid talking inheritance with children. Here are some ways to balance the sensitive topic.
  2. Professionals

    Advisors: Warn Clients About These Audit Triggers

    There are several factors that may increase the risk of an audit, especially with high-net-worth clients.
  3. Retirement

    Secrets to Finding the Right Nursing Home

    The wrong choice could mean inadequate – or even deadly – care.
  4. Investing

    Things Nursing Homes Are Not Allowed to Do

    What rights do a home's residents have? The same ones they they had before they entered the facility.
  5. Retirement

    5 Ways to Protect Pensions from Nursing Homes

    How to safeguard a patient's funds from shady or unscrupulous staffers.
  6. Entrepreneurship

    What's the Purpose of IRS Form 1065?

    Business partners need the information on this form to complete their own tax returns. Here are the details.
  7. Term

    What is Wealth Management?

    Wealth management combines financial and investment advice, accounting and tax services, and legal and estate planning.
  8. Economics

    The Biggest Items Obama Is Still Missing From His Mandate

    Learn how the biggest items missing from Obama's mandate include various forms of tax reform and closing the Guantanamo Bay prison in Cuba.
  9. Home & Auto

    Before You Buy a Home for Your Child: Read This

    It is certainly generous. It can even be advantageous to both of you. But beware of the pitfalls.
  10. Retirement

    Top Reasons Not to Roll Over Your 401(k) to an IRA

    Five cases in which keeping your plan in place – or employing another non-IRA strategy – is the better move.
  1. Duty Free

    Goods that international travelers can purchase without paying ...
  2. Wealth Management

    A high-level professional service that combines financial/investment ...
  3. Tax Deductible Interest

    A borrowing expense that a taxpayer can claim on a federal or ...
  4. Deferred Tax Asset

    A deferred tax asset is an asset on a company's balance sheet ...
  5. Working Tax Credit (WTC)

    A tax credit offered to low-income individuals working in the ...
  6. Average Cost Basis Method

    A system of calculating the cost basis on mutual fund positions ...
  1. What are the best free online calculators for calculating my taxable income?

    Free online calculators for determining your taxable income are located at Bankrate.com, TaxACT.com and Moneychimp.com. Determining ... Read Full Answer >>
  2. What is the difference between comprehensive income and gross income?

    Comprehensive income and gross income are similar, but comprehensive income is a specific term used on a company's financial ... Read Full Answer >>
  3. What tax breaks are afforded to a qualifying widow?

    The tax breaks accorded to qualifying widows or widowers include being able to use a tax filing status that allows for a ... Read Full Answer >>
  4. How is income taxed on prorated salary?

    Since yearly income is viewed by the Internal Revenue Service (IRS) as the total amount of income a person has made over ... Read Full Answer >>
  5. How can I tell which of my business expenses count as write-offs?

    Any basic, reasonably necessary expenses incurred in running a business can be considered possible write-offs. Such expenses ... Read Full Answer >>
  6. What is the difference between a write-off and a deduction?

    There is no difference between a tax write-off and a tax deduction. It's possible that the confusion arises between a tax ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!