When the Tax Tables Turn: Claiming Your Parents as Dependents

For Immediate Release

Contact: Gigi Thompson Jarvis
gjarvis@naea.org, 202.822.6232, x11

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When the Tax Tables Turn: Claiming Your Parents as Dependents

WASHINGTON, DC (January 26, 2012)—The question of whether or not adult children who are living with their parents can be claimed as dependents has been a hot topic this tax season. On the other side of the generational divide, and affecting at least as many people, is the question of whether or not parents can be claimed as dependents on their children’s returns.

“The IRS recognizes that many adult children assume the day-to-day care and financial support of their parents as they age, “explains Andy Stadler, EA, CEO of Stadler and Company Tax Services in Terre Haute, IN. “A lot of people are unaware that it’s not necessary that your parents live in your home in order to claim them as dependents. In fact, they can live in their own home or in a retirement community and still be legally claimed as dependents.”

Stadler lists the following criteria that must be met before either or both parents can be claimed as dependents.

• The parent you intend to claim must be a US citizen or a resident of the U.S., Canada or Mexico.
• He or she must have a valid Social Security number.
• He or she must be legally recognized as your parent, either biologically or by adoption.  
• Your parent must have less than $3,700 gross income for 2011.  Gross income typically means income subject to tax so nontaxable social security benefits are not included in this amount.
• Your parent may not file a joint income tax return with your other parent (this only applies if they are married).
• He or she generally must receive more than 50 percent of all financial support from you unless there is a multiple support agreement, as discussed below. 

If several children are providing financial support for an elderly parent, but one sibling is providing more than half of the parent’s support, only that sibling is able to claim the parent as a dependent. But, in a case where several of the children are providing support that totals 50 percent of the parent’s support, each of those contributing more than 10 percent are eligible to claim the deduction. However, only one of the children can claim the parent as a dependent per year.  

If you are paying for your parent’s adult daycare, there is a tax credit that could amount to 20 to 35 percent of a claim of up to $3,000 (the maximum amount taxpayers are allowed to claim).

If all this sounds complicated, you may want to turn to a licensed tax professional. To locate an enrolled agent in your area, visit the National Association of Enrolled Agents (NAEA) website at www.naea.org and look for the “Find an Enrolled Agent” Directory.

About Enrolled Agents

Enrolled agents (EAs) are America’s tax experts. They are the only federally-licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS. While attorneys and certified public accountants are also licensed, only enrolled agents specialize exclusively in taxes. Enrolled agents are required to complete many hours of continuing education each year to ensure they are up-to-date on the constantly changing tax code and must abide by a code of ethics.