The first step you need to determine is if her pension is taxable income. The IRS provides an interactive tax assistant to assist you in determining the taxation of your parent's pension. The interactive tax assistant is available at the following link: https://www.irs.gov/help/ita/is-my-pension-or-annuity-payment-taxable
Click "Begin" at the bottom of the page.
If your parent's gross taxable income is greater than $4,050 for the year, then you cannot claim them. Non-taxable income, such as Social Security, does not count toward this amount.
To meet the support requirements necessary to claim your parent as a dependent on your tax return, you must cover more than half of your parent’s support costs – meaning 51% or more of their support costs must be covered by you. These costs include food, housing or lodging expenses, clothing, and medical services and/or equipment costs.
If you want to claim your parent as a dependent on your tax return, you yourself cannot be eligible as a dependent on someone else’s tax return. Again, you cannot be claimed as a dependent or eligible as a dependent (even without being claimed) if you plan to claim your parent as a dependent.
The IRS has residency requirements that must be met. To meet the resident requirement, the person you are caring for must meet one of the following:
- Be a legal US Citizen
- Be a US National
- Be a US Resident Alien
- Be a Resident of Canada or Mexico
If all requirements are met, then you will receive an additional $4,050 tax exemption on your tax return. You will also be able to include your parent's medical expenses when calculating your medical deductions on Schedule A, and you may be eligible to claim the Dependent Care Credit if your parent needs assistance while you work or are away.
TurboTax will ask you the necessary questions and based upon your responses ensure that you receive tax deductions and credits based on your answers.
