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Claiming retired parents as dependents- CA

I was wondering if I could claim my retired parents as dependents? My parents and I live in CA more specifically I live in the bay area and they live in LA county. My father receives social security checks of 1k a month and my mother receives checks of 570 a month. I pay their cellphones, car insurance and send them each a few hundred every month. If I claim them as dependents will their social security income be affected and will they lose medicaid coverage? I've been wanting to include them under my medical health insurance but I'm not sure if I can provide them health insurance through my employer which is why I'm afraid of claiming them as them losing medicaid coverage and having their ssi reduced.

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2 Replies
DianeW777
Expert Alumni

Claiming retired parents as dependents- CA

It depends. There is specific criteria to be able to claim a qualifying relative (tax term) as a dependent. Their social security will not be affected one way or the other but you must check with the Social Security Administration (SSA) to see how this might affect their SSI.

 

It will likely affect Medicaid if they are able to receive assistance based on their income. Again, this must be determined by your state assistance office.

 

The rule for tax purposes only to see if they qualify as your dependents are shown below.

 

Qualifying relative

  • They don't have to be related to you (despite the name).
  • They aren't claimed as a dependent by someone else.
  • They're a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.
  • They aren’t filing a joint return with their spouse.
  • They lived with you the entire year (exceptions apply).
  • They made less than $4,300 in 2021.
  • You provided more than half of their financial support.

When you add someone as a dependent, we'll ask a series of questions to make sure you can claim them. There may be other tax benefits you can get when you claim a dependent.  These rules are discussed in detail in the publication link below.

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Hal_Al
Level 15

Claiming retired parents as dependents- CA

Nontaxable Social security doesn't count as income, for the income test, but social security money he/she spends on her self does count as support not provided by you, for the support test. Money she puts into savings & investment does not count as support she spent on herself. Note that a parent is closely related so there is no requirement that they live with you at any time, during the year. But if you provided a home it helps your support case, unless they own the home they live in. 

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 The support value of a home is the fair market rental value, divided by the number of occupants.

 

If no one person (or married couple) provides 50% of the support (for example your siblings are also sending support), then a "multiple support agreement” (IRS Form 2120) can be used, to allow you to claim the dependent. https://www.irs.gov/pub/irs-pdf/f2120.pdf

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