I have a son that is totally & permanently disabled. He turned 18 this year & now receives disability. I have questions on the tax effects & how to properly do this?

[DianeW · Accepted solution]

For 2017 he may still be eligible as a Qualifying Child.  You can determine this by checking to see if the disability income (provided from your child's own sources) provided more than half of his support for the year.  In other words, if that income was more than the funds you were able to provide for his support.

The Dependency Support Statement (click the link) will be helpful to make your determination as to whether you can claim the dependent exemption for your child or not.  It is not an optional choice.

The effect on your return if you are not able to show you provided more than half of his support would be that the earned income tax credit as well as the dependency exemption would not apply to you for last year.  And your son would not appear on your tax return.

[pemj26]

When we filed for his disability we were instructed to charge him rent or his disability would be cut in half.  Is the monthly rent taxable to us?  We have been told yes & no.  One person said no as we can consider it like a roommate that is sharing cohabitation expenses.  Would this effect claiming him as a dependent if we do or don't?

[DianeW]

If you own the home, then the rent should be reported on your tax return and then you can use expenses such as mortgage interest, property taxes and insurance for only the part of the home considered to be his portion.  If you rent a home and you, the parents are the lessee and obligated for the rent.  Again, you can determine his portion of the rental home.  If he is being charged for his share of the utilities or paying his own portion of the utilities then this would not be entered on your return.  His unit is determined by number of rooms or square feet whichever is the most accurate depiction of the area.
The effect on your tax return will be the same based on the terms above.  You will still need to figure out whether he paid more than half of his own support. The worksheet link is very helpful.  You basically put down all expenses for him (clothes, food, grooming, housing, utilities, capital assets such as a computer, cell phone, etc.) then subtract the income that came from his disability to see if your share his higher.