Good News for the Sandwich Generation? Claiming Parents as Dependents

Claiming Parents as Dependents

Mom and Dad are getting older. They may even be relying on you for support.

That’s why it’s good to know that you may be able to claim your parents as dependents.

Even if Mom or Dad does not live with you, you may be able to claim him or her as a dependent. This is vastly different from claiming a child as a dependent, where the child must live with you for at least half of the year.

You May be Able to Claim Dad as a DependentThe Sandwich Generation: Dependents on Both Sides

Nearly half of adults in their 40s and 50s fall into the  “sandwich generation.”  These are people who are simultaneously caring for elderly parents and raising or supporting children.

For this squeezed demographic, being able to claim Mom or Dad as a dependent can be a huge boon.

In fact, it can cost more to care for aging parents per year than it does to raise a child, especially if some form of long-term care is involved.

The following criteria must be met in order to claim your parent as your dependent for your 2017 tax return.

Claiming Parents as Dependents  – Relationship to You

Mom or Dad must be legally recognized as your parent. Adoption counts!

Claiming Parents as Dependents – Citizen or Residential Status

To be claimed as a dependent, Mom or Dad must be either U.S. citizen or a resident of Mexico or Canada.

Do You Contribute to Mom's Support? If So, You May be Able to Claim Her as a DependentClaiming Parents as Dependents – Level of Support

Mom or Dad must be receiving a minimum of 50% of his or her support from you.

Now, if your brothers or sisters are chipping in, there may not be one person who is contributing 50% of the support. In this case, everyone who contributes at least 10% can sign the Form 2120 – Multiple Support Declaration and give it to the one declaring Mom or Dad as a dependent. You can rotate each year so that all adult children who are contributing can have a chance to claim Mom or Dad.

Claiming Parents as Dependents – Income Requirements

Mom or Dad must have less than $4,050 in taxable gross income.

As Mom and Dad age, they are likely receiving income from 401K distributions, pensions, IRAs, etc. They may also have rental property or stock holdings that produce dividends. All of these sources of income count as taxable income.

At age 62, Mom and Dad are eligible for Social Security payments (they can wait as late as age 70). Depending on total income, up to 85% of Social Security payments can be taxed as well.

Exceptions to taxable income include distributions from Roth IRAs, gifts, bequests and inheritances, damage awards for physical injury or sickness, Health Spending Account distributions for qualified medical expenses, and cash rebates from a dealer or manufacturer for an item that was purchased.

Child support payments and qualified adoption expense reimbursements are not taxable, either. However this is seldom an issue for those in this age group. You can find a complete list of taxable versus non-taxable income on the IRS website.

Claiming Parents as Dependents – Not Legally Required to File a Tax Return

Mom or Dad must not meet the requirements for filing a tax return. There are age and income thresholds under which they do not need to file taxes for the 2017 tax year:

  • If Mom or Dad is under 65 and filing with Single status, he or she must make less than $10,350 per year
  • If over 65 with Single filing status, must make less than $11,900 per year
  • If under 65 with Married Filing Jointly status, must make less than $20,700 per year
  • If over 65 with Married Filing Jointly status, must make less than $21,950 per year

Finally, your parent cannot file a joint return with their spouse for any other purpose than to receive a tax refund.

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Jeffrey Schneider, EA, CTRS, NTPI Fellow has the knowledge and expertise to help you reach a favorable outcome with the IRS. He is the head honcho at SFS Tax & Accounting Services as well as the Enrolled Agent and Certified Tax Resolution Specialist for SFS Tax Problem Solutions.

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Now What? I Got A Tax Notice From The IRS. Help! Defining and deconstructing the scary and confusing letters that land in your mailbox. Jeff defines and deconstructs the scary and confusing letters in a fashion that mixes attention to detail with humor and an intricate clarification of what is what in the world of the IRS.

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For more on SFS Tax Problem Solutions, visit: http://sfstaxproblemsolutions.com/

For more on SFS Tax & Accounting Services, visit http://sfstaxacct.com/

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