What Is the Support Test?
The support test is one of five tests that must be passed in order to claim someone else as a dependent for legal and tax purposes. The support test mandates that the taxpayer must have provided more than half of the prospective dependent’s living expenses during the year.
Living expenses include meals, lodging, clothing, medical and dental care, transportation, recreational activities, and anything else that a parent would normally provide for a child or other dependent. There are, however, special rules with respect to multiple-support agreements and for children of divorced or separated parents.
- The support test is a test used by the IRS to help determine if an individual can be claimed as someone else's dependent for tax purposes.
- The support test, in particular, mandates that a taxpayer pay at least half of a prospective dependents' annual living expenses.
- The definition of living expenses, and what calculations are involved in the test, are specific and outlined by the IRS.
Understanding the Support Test
A dependent is a qualifying person who entitles a taxpayer to claim dependent-related tax benefits on a tax return. Tests in the Internal Revenue Code (IRC) establish a person's eligibility to be a taxpayer's dependent for dependency claims.
The Support Test is closely related to the Relationship and Residence Tests, but the prospective dependent does not have to live with the taxpayer in order to pass this test. The Support Test is perhaps the most direct measure of whether a taxpayer should be able to claim someone as a dependent. After all, if the person is not financially dependent upon the taxpayer, then why should the taxpayer be able to claim his or her as a dependent?
The potential dependent in question may be a qualifying child or a qualifying relative and individuals must consider the support test every tax year for which they wish to claim a dependency exemption.
Support test guidelines
The Support Test calculations are very specific, and must obey the following guidelines:
- The amount of support for lodging costs takes into account the fair rental value of the lodging, including a reasonable allowance for the use of appliances, utilities, and furniture.
- The cost for bulk purchases bought for an entire family unit, such as groceries, must be divided by the number of total household members, in order to achieve an accurate figure spent on the potential dependent.
- The residential property provided to house a potential-dependent must be measured by its fair market value.
Certain appliances and electronic items may be considered expenses, depending on their use. If you buy a child a $200 stereo as a birthday present, which is primarily enjoyed within the confines of his room, you may include this as a support cost. But a $500 flat screen television stationed in the recreation room, to be enjoyed by the entire family, may not be included as a support cost, for that same child. Other items that are not considered support costs include life insurance premiums, educational assistance, and money parked in a savings account, that is not ultimately spent.
Individuals who elect to use a fiscal year to report their income must include the support paid during the calendar year in which your fiscal year began.