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Claiming Parents as Dependents

by At Home Preferred on May 10, 2013

As a youngster, your parents claimed you as a dependent on their income taxes. With that they were able to save some taxes (although we all know kids cost more than that savings!). Now, if you are providing a significant amount of financial support to a parent, you may be able to claim them as a dependent to lower your tax bill.

As with claiming any dependent, there are five tests to determine the dependent status. The tests are outlined in IRS Publication 501, Exemptions, Standard Deduction and Filing Information, but the overriding test says you have to have provided more than half of your parent’s annual taxable income in support (Social Security is not necessarily taxable income). If you have done that and met the other dependency tests, you may be entitled to some tax savings.

Here’s the take-away from this: If you are paying to support a parent, talk to your CPA about whether or not you can claim them as a dependent.
Juli Erhart-Graves is a CERTIFIED FINANCIAL PLANNERâ„¢ practitioner with Worley Erhart-Graves Financial Advisors, Inc. Worley Erhart-Graves Financial Advisors, Inc. is a Registered Investment Advisor. Registration as an investment advisor does not constitute an endorsement of the firm by securities regulators nor does it indicate that the advisor has attained a particular level of skill or ability. Content is for informational purposes only and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.