Special needs child

[reggiejackson44]

I have a special needs son who is 28 years old. He lives at home and cannot care for himself.  Could we have declared him as a dependent? We have not declared him for several years now.  Our state agency says we should have been declaring him all this time.  Can we retroactively declare him?

[Anonymous]

Hi, you can claim a 28 year-old  with special needs providing certain circumstance outlined below:

When your child reaches age 19, the rules change (for students, the rules change at age 24). You may still be able to deduct him as a dependent – provided that a few requirements are met. First, he must be permanently and totally disabled (if he is receiving Supplemental Security Income or Social Security Disability benefits he has been determined to be disabled).

Generally speaking, he must also live with you for at least half of the year (although there are a number of exceptions to that requirement), you must provide at least half of his support, and he cannot be claimed as a dependent on anyone else’s tax return.

These rules apply to your child, biological or adopted. They also apply to your stepchild, foster child, grandchild, brother, sister, niece, nephew or a descendent of any of those people.

There is actually another way your child can and certain other relatives may qualify as your dependent, and it does not require a finding of permanent and total disability. A “qualifying relative” can be a dependent even if he does not live with you (he has to be on a lengthy list of specific relatives, including children siblings, parents and many more), so long as you provide half of his support and he does not have income over $3,900 (in 2013 – this number will change each year).

The Internal Revenue Service has an excellent publication listing the finer details of claiming a child or other relative as a dependent. Look for Publication 501: Exemptions, Standard Deduction and Filing Information. It is updated annually.

Here is a link to Publication 501:

https://www.irs.gov/forms-pubs/about-publication-501

[KochuK]

Hi reggiejackson44,

Please refer to IRS Pub 501, page 11, "Overview of the Rules for Claiming a Dependent.

https://www.irs.gov/pub/irs-pdf/p501.pdf 

Since your son is 28 years old, he can be a "qualifying child" if permanently and totally disabled, and did not provide more than half of his own support for the year. If no, please refer to "Tests to be a qualifying relative".

As for the timing for filing an amendment, "Generally, for a credit or refund, you must file Form 1040-X
within 3 years (including extensions) after the date you filed your
original return or within 2 years after the date you paid the tax,
whichever is later."

Page 3 of https://www.irs.gov/pub/irs-pdf/i1040x.pdf 

Hope this helps. Thank you.

Kochu Kitty

[Opus 17]

You can claim your child as a "qualifying child" dependent if they live in your home and is permanently disabled.  Disabled for tax purposes means "can't perform substantial gainful work."  Gainful work is employment for money.  Working in a sheltered workshop as occupational therapy is not considered gainful work even if he is paid, but working a minimum wage job at least part time will usually be considered the ability to perform gainful work.

You can claim your child as a "Qualifying relative" dependent if you pay more than half their support and they have less than $4500 of taxable income.  Taxable income does not include social security but could include investments in the child's name.  The child does not have to be disabled or live with you to be a "qualifying relative" dependent.

Each type of dependent is worth a $500 tax credit.  If your child lives in your home, and is disabled, and if you pay for care (day care) to watch your child so that you (and your spouse if married) can work, you can also claim the child and dependent care credit.

You can file amended returns for a refund for up to 3 years after the filing deadline.  Since the deadline for the 2019 tax season was extended to July 15, 2020, you have about 18 days to file an amended return for the 2019 tax season.  You have plenty of time to file amended returns for the 2020, 2021 and 2022 seasons. 

[Anonymous]

Hi,

The limit for tax year 2023 is $4,700.

In response to your question about retroactively claiming your special needs son as a dependent, you can amend your tax return three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later. 

A couple edits that I wanted to add are:

The income threshold was 4,400 for 2022 and $4,300 for 2021 and 2020.

In addition, here is an article below that pertains to your question:

https://www.irs.gov/forms-pubs/notice-2023-21-makes-more-taxpayers-eligible-for-a-credit-or-refund-i... 

I believe that the 3-year period is different based on what day in 2020 you filed your 2019 tax return.

Thank you,

John

CPA

[NCperson]

@Opus 17  while the "three year window" to file a 2019 tax return to claim any refunds is July 15, 2023, the deadline to amend a 2019 tax return to claim any refunds is the earlier of a) three years after the original date the tax return was filed or July 15, 2023 (assuming no approved extensions), which ever is earlier.  So for many that already filed, the three year window to submit an amendment has expired  😒

it's an interesting nuance I recently learned. 

[Opus 17]

@NCperson 

I think you’re only half right here.  A return filed before the deadline is deemed to have been filed on the deadline.  Yes, in a normal year, a return filed June 30 with a valid extension to October 15 is deemed filed on June 30.  But since the official deadline for 2019 was July 15, any return filed before July 15 is deemed filed on July 15.  

Generally, for a credit or refund, you must file Form 1040-X within 3 years (including extensions) after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later. If you filed your original return early (for example, March 1 for a calendar year return), your return is considered filed on the due date (generally April 15). However, if you had an extension to file (for example, until October 15) but you filed earlier and we received it on July 1, your return is considered filed on July 1.

[NCperson]

@Opus 17 again, I think the COVID issues of 2019 and 2020 created nuances to the normal rules.

https://www.irs.gov/forms-pubs/notice-2023-21-makes-more-taxpayers-eligible-for-a-credit-or-refund-i...

your thoughts are appreciated..... 

from the link above: 

 For 2019 income tax returns. Affected taxpayers are individual taxpayers whose returns were due between April 1, 2020, and July 15, 2020, and who did not receive a filing extension. An affected taxpayer who filed their 2019 return after April 15, 2020, but on or before July 15, 2020, because of the postponement provided by Notice 2020-23 may be refunded all income tax payments for 2019 if they file their claim for refund within 3 years of the date they filed their original return. If, for example, an affected taxpayer filed their return on June 22, 2020, the taxpayer may be refunded all income tax payments for 2019 if they file their claim for refund by Thursday, June 22, 2023. An affected taxpayer who filed their 2019 return after July 15, 2020, may be refunded all income tax payments for 2019 if they file their claim for refund by Monday, July 17, 2023. (While 3 years from the postponed July 15, 2020, due date is July 15, 2023, that date will be a Saturday.)

So for 2019,

a) tax returns filed up until April 15, 2020 had until April 15, 2023 to file an amendment

b) tax returns filed between April 15, 2020 and July 15, 2020 had until the 3rd anniversary of the filing to file an amendment

c) tax returns filed after July 15, 2020 have until July 17, 2023 to file an amendment

[Opus 17]

@NCperson 

You are correct.  When reading the actual notice 2023-11 rather than the press release, it explains that a postponement (under a certain section of the tax code) is not an extension (as defined under a different section of the code).  So the official deadline was always April 15 and was not extended in a way that would extend the amending deadline.  (They then go on to grant discretionary relief to give people a full 3 years, but that is different than recognizing July 15 as a new extended deadline because it wasn't an extension.)