Can You Claim Your Elderly Parent as a Dependent?

Claiming family members as dependents on federal income tax returns can unlock tax benefits, such as credits and deductions, reducing overall tax liability. However, claiming a dependent depends on meeting specific Internal Revenue Service (IRS) criteria, which can be complex. This article clarifies the requirements for claiming an elderly parent as a dependent.

Understanding Dependent Categories

The IRS outlines two main dependent categories: a Qualifying Child and a Qualifying Relative. Each category has distinct requirements. The Qualifying Child category generally applies to younger individuals, with age, residency, relationship, and support tests for children, stepchildren, foster children, siblings, or their descendants.

Elderly parents typically fall under the Qualifying Relative category for dependency purposes. The criteria for a Qualifying Relative differ significantly from those for a Qualifying Child; for instance, they lack an age limit but include a gross income test. This article focuses on the specific criteria that define a Qualifying Relative as they apply to an elderly parent.

Meeting the Qualifying Relative Tests

To claim an individual as a Qualifying Relative, five distinct tests must be satisfied for the tax year. These tests ensure the individual meets the IRS’s definition of a dependent.

The “Not a Qualifying Child” test requires that the person cannot be a qualifying child of any taxpayer for the tax year. This means the individual cannot meet the criteria to be claimed as a qualifying child by you or anyone else.

The “Member of Household or Relationship” test specifies that the parent must either live with the taxpayer for the entire year or be related in a specific way. Qualifying relationships include a parent, grandparent, other direct ancestor, or stepparent, without requiring residency. Temporary absences for medical care, such as a nursing facility stay, are considered living with the taxpayer.

The “Gross Income” test mandates that the parent’s gross income for the calendar year must be less than a specific threshold. For the 2024 tax year, this amount is $5,050. Gross income includes all non-tax-exempt income, such as wages, interest, dividends, and taxable Social Security benefits. Only the taxable portion of Social Security benefits counts towards this limit.

The “Support” test requires you provide more than half of the parent’s total support for the entire year. Support includes essential living expenses such as food, lodging, clothing, medical and dental care, education, and transportation. If the parent lives in your home, the fair rental value, including utilities and furniture, is considered part of the support provided. Expenses not specific to one person, like household groceries, should be divided among all household members. Federal, state, and local taxes, Social Security taxes, life insurance premiums, and funeral expenses do not count as support.

The “Joint Return” test requires that the parent cannot file a joint tax return for the year. An exception exists if the joint return is filed solely to claim a refund of withheld income tax or estimated tax paid. The “Citizenship” test specifies that the parent must be a U.S. citizen, a U.S. national, a U.S. resident alien, or a resident of Canada or Mexico.

Applying the Rules to Common Scenarios

One common scenario involves multiple individuals contributing to an elderly parent’s support. When no single person provides more than half of the parent’s total support, but a group of individuals collectively does, a “Multiple Support Agreement” can be utilized. This agreement, filed using IRS Form 2120, allows one member of the group to claim the parent as a dependent. The claiming taxpayer must have provided more than 10% of the parent’s total support, and each other person who contributed over 10% must sign a written statement waiving their right to claim the parent.

Parents residing in nursing homes or assisted living facilities also present specific considerations for the support and residency tests. The costs associated with these facilities, including medical care, lodging, and other services, are considered part of the parent’s total support. Even if the parent does not physically live in the taxpayer’s home, a temporary absence for medical care, such as living in a nursing facility, is treated as if the parent still resides with the taxpayer for the purpose of the “Member of Household” test.

Social Security benefits received by an elderly parent require careful consideration for both the gross income and support tests. For the gross income test, only the taxable portion of the Social Security benefits is included in the parent’s gross income calculation. However, for the support test, the entire amount of Social Security benefits received by the parent counts as their own contribution to their support, even if they do not spend it. If the parent’s unspent Social Security income, combined with any other funds they spend on themselves, exceeds half of their total support, the taxpayer cannot claim them as a dependent.