Does military retirement count as earned income for the purpose of determining dependent eligibility?

[m2c67]

My parent lives with me and I provide more than half of the living expenses. I am unmarried. My parent receives part of their former spouses military retirement (they are divorced) on a monthly basis. Does this income count as "earned" to be calculated as part of the determination if I can claim head of household?

[DoninGA · Accepted solution]

The retirement/pension income reported on a Form 1099-R is taxable income so is part of their gross income under the Qualifying Relative rules.

To be a Qualifying Relative -

1. The person cannot be your qualifying child or the qualifying child of any other taxpayer. A child is not the qualifying child of any other taxpayer if the child's parent (or any other person for whom the child is defined as a qualifying child) is not required to file an income tax return or files an income tax return only to get a refund on income tax withheld.

2. The person either (a) must be related to you or (b) must live with you all year as a member of your household. 

3. The person's gross income for the year must be less than $4,150 (social security does not count) in 2018

4. You must provide more than half of the person's total support for the year.

5. The person must be a U.S. citizen or a U.S., Canada, or Mexico resident for some part of the year.

6. The person must not file a joint return with their spouse.

[rjs]

Note that the income limitation applies to *gross* income, not *earned* income.