Hi, I have been supporting my parents for a long time and this year I decided to try filing as head of household and I just want to make sure I understand all the conditions right:
1) I am single, live with my parents for many years (though the house is under their names) and I provide more than 50% of their expenses. Both of my parents are 70+ years old. all of us are US citizens
2) I don't think I need to count their social security benefits. Without counting the SS, each them of them has way less than $4400 in other sources of income. However, my parents do need to file taxes though.
However, I think the catch is my parents cannot file as married joint return correct? I only come across this as I browse through the resources on this website. I almost missed out this details since it wasn't mentioned on any other website.
I would appreciate any help in clarifying the matter. Thank you much in advance!
You can claim a person as a dependent who files a joint return if that person and that person’s spouse file the joint return only to claim a refund of income tax withheld or estimated tax paid.
Given their income that you posted I would think that they fit this description.
One other thing. Since you live in their home did you take that into consideration in calculating whether you pay more than half of household expenses?
Yes, in your case, you can claim your parents as dependents even if they file a joint return.
The condition for a dependent not filing a joint return (except when the joint return is filed exclusively to obtain a refund of tax withheld or estimated tax) applies only for a qualifying child.
Please read this IRS publication page 26 for more information.
Thank you so much. What this means as far as joint return is that it's ok if my parents file as joint married, as long as they originally do not need to file (due to their low income)? I'm filing for them only because I want to take back the withholding on my dad's RMD.
Thank you but I believe the joint return exclusion applies to non-child dependents as well. I just read it on the IRS's website
@harvon said "live with my parents for many years (though the house is under their names)".
The support value of the home, provided by the parents, is the fair market rental value of the home divided by the number of occupants. So, if they live in their own home, that has to be taken into account in determining if you provide more than half their support.
The IRS has a worksheet that can be used to help with the support calculation. See: http://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf
Thank you. Regarding that worksheet, I am wondering if both parents own the home, shouldn't the fair rental value ((line 6b) be divided by half when calculating their own support ? Because it looks like when calculating the expenses, you have to divide by the people in the household, but when calculating the person's own support (Line 21), then you have to use the whole rental value of the house. That doesn't seem like a fair comparison.
Thank you again!