Tax Guide |
|
||||||||||||||||
To meet the support test for a qualifying child, the child cannot have provided more than half of his or her own support for the year.
The support test for a qualifying child is different from the support test to be a qualifying relative, which generally requires that you must provide more than half of a person's total support during the calendar year as described below.
For example, if you provided $4,000 toward your 16-year-old son's support for the year and he has a part-time job and provided $6,000 to his own support, then he provided more than half of his own support for the year. Therefore, he is not your qualifying child.
The support test for qualifying relative requires that you provide more than half of the person's total support during the calendar year.
However, if two or more persons provide support, but no one person provides more than half of a person's total support, see Multiple Support Agreements.
|
Total support for the year. The first step is to determine how much was actually spent on the individual's support during the year.
"Total support" includes amounts spent to provide food, clothing, lodging, education, medical and dental care, health insurance, recreation, transportation, and similar necessities. Other items can be included, depending on the situation. For example, if you pay someone to provide child care or disabled dependent care, you can include the payments as support even if you claim a tax credit for them.
Items not included as support are federal, state and local taxes, life insurance premiums, funeral expenses, savings and investments, and scholarships received by your child if the child is a full-time student.
Each item you provided is valued at its actual cost. In the case of lodging, the cost is determined as a portion of the fair rental value of the home provided to the dependent. The fair rental value usually includes utilities and furnishings.
Where the precise cost of the support items provided to the dependent can't be determined (e.g., the value of groceries consumed by the person is unknown), you must compute the cost of the item for the entire household in the year, and assign a proportionate share to each member of the household.
Where did the support come from? Once you know the total value of support received by the individual, you must compute how much of it was provided by yourself (and your spouse, if filing jointly), or how much the individual provided for their own support,and then compare the amounts.
In some cases, the individual may be receiving income from outside sources such as Social Security, a welfare program, an educational institution, or other individuals. None of this income is treated as support provided by you.
If you are an employer of the individual (for example, if you hire your child to perform office work), the wages you pay are not treated as support provided by you. Also, if the individual takes out a loan and uses the proceeds for educational or other expenses, the loan proceeds count toward total support but not toward support provided by you.
However, the fact that the individual is receiving outside income does not automatically mean that it is being used to support that individual. Amounts that the person saves or invests, or spends on non-support items like life insurance, are not treated as support. This is true even if you encourage the person to save his or her own money (and perhaps to open an IRA) and you make up for the amount saved by providing a comparable amount of support.
|
|
© 2024 Wolters Kluwer. All Rights Reserved.
