Feb 18, 2008

Qualifying Relative as a Dependent?

QUESTION: My 96 yr old grandmother takes care of her 68 yr old old son. She spends about 90% of her pension supporting him, he has lived with her for ~20 years, he only gets a disability pension from the army of $850/month, and he hasn't had a job in 30 years.
1. Is he qualified to be declared a dependent? 2. If he is qualified, is she required to have some sort of legal paper like a power of attorney?

ANSWER: There are four tests to determine the ability to claim someone as a qualifying relative. Let's examine if your situation survives the four tests:
1) Relationship test > Since the son is living in the same home with his mother and is member of her household, this test is passed.
2) Gross Income test > The son's disability pension is excluded from the income test. Thus, since his annual income is under $3,400 (for 2007), this test is passed.
3) Dependency test > The son must not be able to be claimed by any other taxpayer as a dependent. It appears that this test is passed.
4) Support test > As long as the mother pays more than half of the son's total financial support for the tax year, factoring in the $850/month disability benefit, this test should be passed. This test appears to be the most crucial in your case. The mother must provide more than $850/month toward the total financial support of the son.
To answer your second question, no power of attorney is needed. However, evidence of financial support (such as cancelled checks, store receipts, etc.) is suggested in the event the IRS ever questions the validity of the dependency deduction.

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