Can I claim my parents as dependents on my tax return?

2018 law change: This deduction is gone, beginning with the 2018 tax year.  However, the increased standard deduction amount and the new $500 credit for non-child dependents may offset at least part of this change.  The explanation below applies to tax years before 2018.

Pre-2018 rules for claiming parent as a dependent

Under IRS code, a person deemed the head of a household can claim relatives living in that household as dependents on a tax return. This means that if you meet the requirements of being the head of household, you can claim your parents as tax dependents; but before you do so, you must pass the test set out by the IRS to determine if your parents qualify as non-child dependents. IRS regulations provide five requirements that must be met before you can claim a relative as a tax dependent.

Five Requirements for Claiming Parents as Dependents

The first main requirement is to establish that the person you seek to claim as a tax dependent is a relative. Because of the blending of households, this can become a messy issue. For example, if your natural father and his girlfriend of 20 years moved in with you, you may consider the girlfriend his common law wife and call her mom for all practical purposes. But if your state does not recognize common law marriages, then for all legal purposes, she cannot be your mom. You can still claim your dad, but you won’t be able to claim someone who is just like family as a dependent even though you treat them as such.

The second requirement is citizenship. Your parents must be citizens or residents of the United States, Canada, or Mexico. Both immigration law and tax law can be quite complicated and an overlap of both can be an audit waiting to happen. Only claim your parents if you actually know they meet the citizenship requirement. If you have any amount of uncertainty, confirm your parents’ status before you claim them as dependents on your income tax.

The third requirement relates to your parents’ gross income. Their gross taxable income (e.g., capital gains, self-employment income and other taxable income) must be less than the personal exemption for the year in which you claim them. In 2016 and 2017, the limit is $4050. Gross income does not apply to the nontaxable Social Security benefits or retirement distributions.

The fourth requirement concerns who else may claim your parents as dependents. Once you claim them as dependents, your parents cannot file a joint return and cannot claim themselves as head of a household. To avoid hurt feelings or confusion, visit with your parents (and anyone else who may want to claim them) so that you do not duplicate their status as a dependent.

The last requirement is support. You must provide more than 50% of your parent’s total financial support during the year. If you share that responsibility with others (i.e., your sister and your two brothers), you must provide more than 10% of your parent’s total financial support to claim an exemption for your parents (in addition to meeting the other tests). To do so, you must also obtain IRS form 2120 from each sibling/supporter who provided more than 10% of the support and who has agreed not to take the dependency exemption on their own return.

Case Studies: Claiming Parents as Dependents on Tax Returns

Case Study 1: Blended Household and Legal Recognition

Sarah Thompson lived with her biological father and his long-term girlfriend, who she considered her stepmother. However, since their state did not recognize common-law marriages, Sarah could only claim her father as a tax dependent and not his girlfriend, despite their familial relationship.

Case Study 2: Uncertainty in Parent’s Citizenship

Mark Johnson wanted to claim his parents as dependents on his tax return, but he was unsure about their citizenship status. To avoid potential complications and audits, Mark decided to confirm his parents’ citizenship before claiming them as dependents.

Case Study 3: Financial Support Responsibility

Emily Davis shared the financial support responsibility for her parents with her siblings. To claim her parents as dependents, Emily had to provide more than 10% of their total financial support and obtain IRS Form 2120 from her siblings, acknowledging that they would not claim the dependency exemption on their own returns.

Case Study 4: Duplicate Dependency Claims

Robert Anderson and his sister both intended to claim their parents as dependents on their respective tax returns. To avoid confusion and prevent duplicate claims, Robert and his sister had a conversation and decided that only one of them would claim their parents as dependents.