What is a Multiple Support Agreement
A multiple support agreement is a document which is signed by two or more taxpayers who provide the financial support for a single dependent. This agreement allows several persons who jointly support a dependent to take turns claiming this person as a dependent on their tax returns. Multiple support agreements are necessary in cases where several children contribute to the support of an elderly parent.
Understanding Multiple Support Agreements
Although passage of the 2018 Tax Cuts and Jobs Act eliminated deductions for dependents through 2025, the ability to claim an individual as a dependent may still have other tax benefits. A taxpayer can claim a qualifying relative as a dependent if they furnish more than 50% of the relative's support for a calendar tax year. The 50% threshold may be met by one person or by several people, combining their resources to care for the relative. To claim a parent as a dependent, a taxpayer must complete a multiple support agreement and file IRS Form 2120.
The dependent must pass the relationship test to be eligible. The relationship test mandates that the person in question is a child, sibling, parent, in-law, niece, nephew, aunt, uncle or anyone other than the taxpayer's spouse who lived in the taxpayer's household during the entire year. Adopted, half, and step parents, children and siblings also qualify as do foster children. All descendants of children (grandchildren, great-grandchildren, etc.) also count.
Each tax year, one person may claim the relative as a dependent, assuming they meet the necessary conditions and submit a multiple support agreement. Depending on the situation, they may choose to rotate who makes this claim each year.
The rules governing multiple support agreements are tricky.
- The dependent is a qualifying relative
- They receive more than 50% of support from two or more relatives (and no single individual provides more than 50% support)
- The contributing relatives agree to allow a single, chosen relative to claim the individual as a dependent
- The selected relative furnishes more than 10% of the dependent's support
- All other relatives who also contribute more than 10% of the funds sign multiple support agreements which waive their right to claim dependency for that taxable year
- When filing taxes, the chosen relative attaches IRS Form 2120 to identify the waiving relatives. It is a good idea to maintain a copy of this and all other tax records for future reference.
Example of Multiple Support
Three siblings each provide 20% of the funds to support an elderly parent along with two other relations who each contribute 5%. The parent is a qualifying relative who received 70% support from children and other relatives. The parent can be a dependent because more than 50% of their support was provided. To claim the parent, each of the siblings must sign a multiple support agreement identifying which of the children will claim the dependent for that tax year. The two relations who contributed less than 10% do not need to sign an agreement.
In situations where programs such as social security or other public support funds provide the bulk of support for the dependent, no one can claim the individual as a dependent. As an example, if two children provide 20% support and social security provides 60% of the support, neither child may claim their parent as a dependent.