@robriegel18 wrote:
I have a question about the following Worksheet in Pub 501
https://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf
Is my Dad a qualifying relative if I provided more than 50% support for his living expenses (including his medical expenses in dementia facility) in 2021 even though my Dad had sufficient assets to cover his living expenses. I provided a lot of his medical expenses as support so that he could maintain his assets because the assets provide investment income to help pay (along with his social security) for his living expenses. If he was to sell off his assets to pay for his medical expenses in the dementia unit, then he would soon be out of money, so instead, I helped pay for all his medical expenses and he paid for his other living expenses like food and rent. So I provided the funds to cover more than 50% of his living expenses in 2021, but when I complete the Worksheet above, it doesn't seem like I qualified as providing more than 50% of his living expenses because of his beginning of year assets. So my question is whether I can just compare what I paid for in terms of his living expenses relative to his total living expenses, or do his assets have to come into the discussion because, in theory, he could have paid for all his living expenses by selling off a lot of his assets. Thanks.
You're making this way too complicated and dragging it out much too long. The questions are very simple.
1. Did you pay more than half your father's support expenses?
2. Does your father have more than $4300 of taxable income?
If the answer is yes to #1 and yes to #2, then you can't claim him as a dependent, but you can deduct medical expenses you paid for.
You don't have to use any particular method to calculate if you paid "more than half" the expenses. The IRS worksheet is one method, but you don't have to use the worksheet if you have another way to determine if you paid more than half his expenses.
Review lines 1-5 carefully. Line 1 wants all his money--all sources of income and all assets. Line 2 wants the amount that he spent on his own living expenses, line 3 is money he spent on other things (not his own support) and line 4 is his total assets at the end of the year. 2+3+4+5 should equal line 1. In other words, money he spent on himself plus money he spent on other things plus his savings equals all his money.
But the only number needed later is line 2, what he spent on his own support. Money or assets in savings, or money spent on other people, is not money he spent for his own support.
Nowhere else in the support worksheet does it ask for line 1 (total funds) or line 4 (assets at the end of the year). I don't understand why you think the worksheet is asking you to compare the support you provided against his assets. That doesn't happen anywhere in the worksheet.
