The support test is one of the many interrelated criteria that determine whether someone qualifies as your dependent for tax purposes. The test measures the amount of support provided by the qualifying child or qualifying relatives toward their own support needs from their own funds. Children cannot provide more than half of their own support and still qualify as your dependents. Taxpayers must provide at least half of the support for qualifying relatives in order to claim them as dependents.
How does the support test work?
The support test is a test provided by the IRS to determine whether your children or relatives meet the conditions to be considered dependents on your tax return. To qualify as your dependent, you must provide more than 50% of the support for the child or the relative.
Examples of the support test
For example, if you have elderly relatives whom you care for and they pay 70% of their living expenses, they would not qualify as your dependents. Here’s another example: suppose your teenager earns $2,500 from a summer job. As long as they do not use that amount to pay more than 50% of their own support needs, the IRS considers them your dependent if you provide the remaining portion of their support. Your child’s income includes any Social Security survivor benefits they may receive and spend on their own support.
Qualified financial support
The IRS has different rules regarding the money you use to support potential dependents. For example, you can take into account the following types of income that you used to support the person in question: your income from your job, tax-exempt income, payments you make to a nursing home to care for the person, and Temporary Assistance for Needy Families (TANF) that you use to support the person, and military allowances.
Qualified expenses
There are several categories of goods or services that you can count in your support test. For example, housing is a key part of support expenses. The IRS considers the housing costs you pay for your dependents as a percentage of the fair rental value of the home area occupied by the dependents. If the fair rental value of your home is $2,000 a month and the dependents occupy 20% of the house, their housing will be $400 a month.
Claiming dependents on your tax return
Claiming qualified dependents on your tax return can be as simple as checking the appropriate box and providing the required information. However, it can be more complicated in some cases. If the individual in question is an elderly parent receiving support from you and your two siblings, you must use IRS Form 2120 to determine who can claim the parent. Also, if a parent of a child has a divorce and has the right to claim the child as a dependent, the parent can transfer the right to the other parent using IRS Form 8332.
Benefits of claiming dependents
Qualified dependents may help you qualify for the following tax filing status and tax credits: the head of household tax status (according to other rules), the earned income credit, the child tax credit, the credit for child and dependent care expenses, and the credit for other dependents. Therefore, it is worth crunching the numbers using the dependent worksheet provided by the IRS to determine whether the adult family member is truly your dependent or if your child provided too much of their own support to qualify.
Frequently Asked Questions (FAQs)
What is the support test for dependents who are qualifying relatives?
The support test for dependents who are qualifying relatives is a series of questions and answers regarding how the person is related to you and how much money they earn.
What
What does the support test for dependents include?
The support test for dependents looks at the income and expenses that have been paid for the dependents, such as food, utilities, home repairs, education, and more. It also considers the fair market value of the home you share with the dependents.
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Source: https://www.thebalancemoney.com/what-is-the-support-test-5204888
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