Can we file her tax return separate from ours? Or does she have to be reported as a dependent on our return?

[kaminoge513]

My mother-in-law lives with us all year round and she doesn't earn any income. She didn't have health insurance coverage for 2018. I think she meets the qualifying relatives test but we are not sure if we can file her return separately, or if she has to be reported as a dependent on me and my wife's joint return.

[Vanessa · Accepted solution]

She doesn't HAVE to be claimed as a dependent, but you could choose to claim her if she meets the criteria.  

If she has no income, she would not be able to complete a return.  She would need to have taxable income in order to file a federal return. If she would have income, it would not be reported on your return, it would need to be reported on her own return.

If she does not have health insurance and you claim her, you would be responsible for paying the penalty for her not having health insurance. 

[kaminoge513]

Thank you so much. Are there consequences for not claiming her as dependent this year, but then claim her as dependent for tax year 2019?