This week, I’m back in North Carolina to visit with my parents, albeit this time in happier circumstances. Two months ago, my mom was in the hospital for open-heart surgery; after an initially easy surgery, her right lung collapsed, causing us all a lot of concern and extending my stay a little longer than planned.
Since I’ve been here for more than three weeks in two months, I’m getting used to being in my old room again. The furniture is different – and there are no pictures of dreamy boys taped to the mirror (really, Mom?) – but the creaks and room noises are still the same. I’m fairly certain that if my brothers were here, I could hear them sneaking into the Lance cracker jar…
I am part of a generation that is increasingly seeing a shift in family dynamics. It’s the sandwich generation: those of us who are old enough (*clears throat*) to have kids of our own but young enough to have parents who may need a little help from time to time. In some cases, adults like me are moving back home to take care of their parents, while in other cases, parents are moving in with their children to avoid being placed in a nursing facility.
Shifts in residency aren’t restricted to medical care. The economy has left a lot of twenty-somethings with beautifully framed diplomas and no walls to put them on: the escalating rate of unemployment has resulted in many adult children moving back into their parents’ homes while they look for work.
As more and more families explore different ways to cope with changing dynamics, filing your taxes can be a little more tricky. Who’s the child and who’s the parent for tax purposes? Is a parent, a cousin or even a boyfriend a dependent? And how do you figure it out? Follows are some basic rules.
Generally, for U.S. tax purposes, dependents must be a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico (some exceptions apply for adopted children) and dependents MUST have a valid tax ID number. To be considered your dependent, a person must be either your qualifying child or your qualifying relative.
The rules for a qualifying child are pretty straightforward. A person is your qualifying child if that person meets all of these tests:
- Relationship. The dependent must be your child, stepchild, adopted child, foster child, brother or sister, or a descendant of one of these.
- Residence. The dependent must have the same residence as you for at least half of the tax year.
- Age. The dependent must be under age 19 at the end of the tax year; under age 24 and a full-time student for at least five months out of the year; or totally and permanently disabled.
- Support. The dependent must not have provided more than half of his or her own support during the tax year.
- Return. The dependent, if married, must not have filed a joint return with his or her spouse.
Keep in mind that caveats and exceptions apply, most notably that college students may still be considered dependents even if they live away from home. There are also exceptions for other temporary absences, children who were born or died during the year, children of divorced or separated parents or parents who live apart and kidnapped children.
The rules for a qualifying relative are a bit more facts and circumstances related. Generally, a person is your qualifying relative if that person meets all of these tests:
- Residency OR Relationship. The dependent must live with your OR must be related to you.
- Limited Income. The dependent must not have $3,700 or more of gross (total) income,
- Support. The dependent must be supported (generally more than 50%) by you.
- No Other Claims. The dependent must not be your qualifying child nor the qualifying child of anyone else.
Yes, that does mean that residency is not a requirement to claim a dependent who is your parent (as a qualifying relative) so long as the other criteria apply.
The rules for dependents are not always easy to understand. As I just noted, these are the basics: there are a number of variations on a theme which means that there can be a number of “maybes” and “what ifs?” Keep in mind that if your situation is a little out of the ordinary, the rules could be different, so be sure to ask your tax professional for clarification.