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JanetA
Level 2

Can I claim disabled child who earned $15k per year and is age 25?

I have a child who has a disability who is 25 years old and earned  slightly over $15k last year.  She lived with me all year and I provided over half of her support. She was not a student last year. Can I claim her?  If so, do I enter her income on my return or does she need to file her own return?  Or is it one or the other? 

1 Best answer

Accepted Solutions
macuser_22
Level 15

Can I claim disabled child who earned $15k per year and is age 25?

IRS Pub 524, page 4 defines it.

https://www.irs.gov/pub/irs-pdf/p524.pdfub

 

Permanent and total disability. You have a permanent

and total disability if you can't engage in any substantial
gainful activity because of your physical or mental condition.
A qualified physician must certify that the condition
has lasted or can be expected to last continuously for 12
months or more, or that the condition can be expected to
result in death. See Physician's statement, later.
Substantial gainful activity. Substantial gainful activity
is the performance of significant duties over a reasonable
period of time while working for pay or profit, or in work
generally done for pay or profit. Full-time work (or
part-time work done at your employer's convenience) in a
competitive work situation for at least the minimum wage
conclusively shows that you are able to engage in substantial
gainful activity.

 

In addition the IRS will probably deny it and send a CP87C notice that says:

https://www.irs.gov/individuals/understanding-your-cp87c-notice

 

We sent you this notice because you claimed a dependent on your tax return with reported gross income for more than the deduction amount for a dependent. Someone else also claimed this dependent with the same social security number on another tax return.

You can’t claim someone whose gross income exceeds the deduction amount for a dependent unless that person is permanently and totally disabled at some time during the tax year and his or her income is from services performed at a sheltered workshop.

 

Since your daughters income is from a regular job she does not meet the IRS requirements for "disabled"

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

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10 Replies
ThomasM125
Expert Alumni

Can I claim disabled child who earned $15k per year and is age 25?

You can claim her regardless of her income since she is disabled. You do have to furnish over half of her support, however.

 

She will need to report the income on her tax return.

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JanetA
Level 2

Can I claim disabled child who earned $15k per year and is age 25?

Thank you. So just to clarify, it's ok for me to claim her as a dependent on my taxes (because I did provide over half her support) and for her to file her own tax return?  It's not one or the other? 

LeonardS
Expert Alumni

Can I claim disabled child who earned $15k per year and is age 25?

Yes, to claim an exemption for your child, you must be able to answer "yes" to all of the following questions. 

  • Are they related to you? The child can be your son, daughter, stepchild, eligible foster child, brother, sister, half brother, half sister, stepbrother, stepsister, adopted child or an offspring of any of them. 

  • Do they meet the age requirement? Your child must be under age 19 or, if a full-time student, under age 24. There is no age limit if your child is permanently and totally disabled. 

  • Do they live with you? Your child must live with you for more than half the year, but several exceptions apply. 

  • Do you financially support them? Your child may have a job, but that job cannot provide more than half of her support. 

  • Are you the only person claiming them? This requirement commonly applies to children of divorced parents.  

This link Rules for Claiming a Dependent on Your Tax Return has information you may find helpful. 

 

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Opus 17
Level 15

Can I claim disabled child who earned $15k per year and is age 25?

The child may not be disabled for IRS purposes.  For the IRS, disabled means “unable to perform substantial gainful work, due to a condition that is permanent, or will last at least one year, or will lead to death.”  A person can be disabled under a medical definition but if they can work, they are not disabled for tax purposes.  

Substantial gainful work does not include work done at sheltered workshops and rehab settings.  But if your child can work a “regular” job without special accommodations, can keep a schedule, and so on, they are not disabled for tax purposes.  $15,000 of income on the child’s own tax return may cause them to take a second look at your return.  So make sure your child actually meets the tax definition of disabled.  

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
macuser_22
Level 15

Can I claim disabled child who earned $15k per year and is age 25?

I agree with Opus.  Being able to earn $15,000 is evidence that she can perform substantial gainful work so she would not be disabled for tax purposes.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
JanetA
Level 2

Can I claim disabled child who earned $15k per year and is age 25?

There are a lot of special accommodations and support and she is considered permanently disabled through social security.  It isn't a shelter job, but a regular job, but without the support, she'd never be able to do it.  I couldn't find anything in the IRS that indicates claiming a disabled dependent and making a certain level of income. 

Opus 17
Level 15

Can I claim disabled child who earned $15k per year and is age 25?

There's no dollar amount with the IRS.  It's "substantial gainful activity."

https://www.irs.gov/publications/p524#en_US_2019_publink100038680

 

The IRS says this in the publication on the tax credit for the disabled, the same definition applies to dependents.

 

You have a permanent and total disability if you can't engage in any substantial gainful activity because of your physical or mental condition. A qualified physician must certify that the condition has lasted or can be expected to last continuously for 12 months or more, or that the condition can be expected to result in death.


Substantial gainful activity is the performance of significant duties over a reasonable period of time while working for pay or profit, or in work generally done for pay or profit. Full-time work (or part-time work done at your employer's convenience) in a competitive work situation for at least the minimum wage conclusively shows that you are able to engage in substantial gainful activity.

 

Substantial gainful activity isn't work you do to take care of yourself or your home. It isn't unpaid work on hobbies, institutional therapy or training, school attendance, clubs, social programs, and similar activities. However, the nature of the work you perform may show that you are able to engage in substantial gainful activity.

 

It just depends on the nature of the work she is capable of doing. 

 

Question 1: Can you claim her as a dependent?  Possibly.  There are two slightly different sets of rules.  You can satisfy either set of rules, the dependent credit is the same $500 either way.

 

Qualifying child rules: She is permanently disabled, and she lives in your home more than half the year, and she does not provide more than half her own support.  In this case, it does not matter who provides her support, it can be you, the state, charity, or anyone else, as long as she provides less than half her own support.  

 

Qualifying relative rules: She can be any age, and does not have to be disabled, and can live anywhere, as long as you provide more than half her total support.  Here, all her sources of support do matter, because if she is supported by the state or other relatives, it might mean you pay less than half.  Even if she pays less than half, that is not enough for the qualifying relative rules; you must provide more than half.

 

Support includes her costs for food, clothing, housing, medical care, transportation, entertainment and incidentals.  If she lives with you, you can count a percentage of your home's rental value, utilities, insurance, and other home expenses as support you provide to her.  (If 3 people live in the home, 1/3 of the costs are allocated to your daughter.)  With $15,000 in income, you would generally need to show one way or the other that her total support costs are more than $30,000.

 

Question 2. Where do you report her income?  Income earned from working is always reported on a person's own tax return, even if they are someone else's dependent.  You will need to check the box in the personal info section that says "this taxpayer can be claimed as a dependent by someone else."

 

Note that, if using Turbotax Online, you will need a separate account with a different user name and password to prepare a second person's tax return.  Each online account can only prepare 1 return.

 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
macuser_22
Level 15

Can I claim disabled child who earned $15k per year and is age 25?

IRS Pub 524, page 4 defines it.

https://www.irs.gov/pub/irs-pdf/p524.pdfub

 

Permanent and total disability. You have a permanent

and total disability if you can't engage in any substantial
gainful activity because of your physical or mental condition.
A qualified physician must certify that the condition
has lasted or can be expected to last continuously for 12
months or more, or that the condition can be expected to
result in death. See Physician's statement, later.
Substantial gainful activity. Substantial gainful activity
is the performance of significant duties over a reasonable
period of time while working for pay or profit, or in work
generally done for pay or profit. Full-time work (or
part-time work done at your employer's convenience) in a
competitive work situation for at least the minimum wage
conclusively shows that you are able to engage in substantial
gainful activity.

 

In addition the IRS will probably deny it and send a CP87C notice that says:

https://www.irs.gov/individuals/understanding-your-cp87c-notice

 

We sent you this notice because you claimed a dependent on your tax return with reported gross income for more than the deduction amount for a dependent. Someone else also claimed this dependent with the same social security number on another tax return.

You can’t claim someone whose gross income exceeds the deduction amount for a dependent unless that person is permanently and totally disabled at some time during the tax year and his or her income is from services performed at a sheltered workshop.

 

Since your daughters income is from a regular job she does not meet the IRS requirements for "disabled"

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

View solution in original post

Opus 17
Level 15

Can I claim disabled child who earned $15k per year and is age 25?

CP87C imposes a specific dollar burden not found in the tax code.   And the taxpayer stated her child needed special accommodations, that may not reach the presumptive test of "Full-time work in a competitive work situation". 

 

It's a case where the taxpayer needs to be careful and know what the rules are, but we can't say further on whether the accommodations would invalidate the presumption.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
JanetA
Level 2

Can I claim disabled child who earned $15k per year and is age 25?

Thank you for providing that notice. Hearing that her work would need be at a shelter made all the difference, so now I know I can't claim her. My daughter is disabled through social security and they don't consider her work "substantial gainful activity," so it is surprising that the IRS has stricter rules.

 

She has many other expenses that a nondisabled person wouldn't have so I do provide more than half her support. She could never keep a job if she wasn't living at home, I was driving her to work, she didn't have all those accommodations, had a job coach etc. She's missed many weeks of work and had many jobs throughout the year, and it's unknown how long she's able to keep each job. 

 

Thank you everyone!

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