Tax strategy question: paying parents rent while not live with them.

kaitoyzc — Sat, 01 Jun 2019 02:03:53 GMT

I am a NY resident living/working in va and paying my own rent around $1.2K with annual salary of $75K, I pay VA non-resident tax and taking a credit for taxes paid to VA for NY portion this year 2016

My parents lives in NY, I pay their rent for around $1.5K + utilities per month for the year 2017. My mother annual income is around $23K. My father is not working. They are both in their 50's. They file tax jointly. I file as single this year 2016

What tax incentive/strategy do I have for the year 2017 if I change tax filing status of mine and my parents?

The only tax benefit that you could get for paying your p...

DS30 — Sat, 01 Jun 2019 02:03:55 GMT

The only tax benefit that you could get for paying your parent's rent and utilities would be to claim them as your dependents. Unfortunately, based on the information that you provided, your parents would fail the income test (and possibly the support test) as described below.

You could claim your elderly parents as dependents even if they don't live with you for the entire year as long as they meet the qualifying relative test:

An individual must meet all 4 of these requirements in order to be considered your Qualifying Relative:

Not a Qualifying Child: The individual cannot be your Qualifying Child and cannot be someone else's Qualifying Child. They are a Qualifying Child if they meet all the requirements, whether or not they are claimed as a dependent
Relationship: The person must either have lived with you for the entire year as a member of the household (a person who is not actually related to you may meet the requirements in this way), or be related to you in one of the following ways: your child, stepchild, grandchild or other descendant of one of your children (or stepchildren or foster children), son-in-law, daughter-in-law, brother, sister, half brother, half sister, stepbrother, stepsister, brother-in-law, sister-in-law, parent, stepfather, stepmother, father-in-law, mother-in-law, grandparent, and, if related by blood, aunt, uncle, niece, or nephew. Remember that a child whom you legally adopted is always considered to be your child. Also note that, for the purposes of this requirement, divorce or death does not change any relationship which was established by marriage (e.g. son-in-law, daughter-in-law, etc.)
Gross Income: The person must have made less than $4,000 in gross income during 2016.
Support: You must have provided more than half of the individual's total support during the year

For additional information about claiming elderly parents as dependents, please refer to the following link:

https://turbotax.intuit.com/tax-tools/tax-tips/Family/Steps-to-Claiming-an-Elderly-Parent-as-a-Depen...

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Tax strategy question: paying parents rent while not live with them.

The only tax benefit that you could get for paying your p...