Dependent Question

[AndrewA87]

My son is on SSDI. He pays us room and board each month at Fair Market Value.

Am I correct in saying he does not qualify as a dependent?

[Vanessa A]

Clarification

How old is your son?  If your son is an adult and lives with you but does pay you rent at FMV, then you are correct, he would not be your dependent because you are not providing over half of his support.

 

[AndrewA87]

He is an adult with autism. His SSDI/SSI pays his room and board at FMV.

[Hal_Al]

Q.My son is on SSDI. He pays us room and board each month at Fair Market Value.

Am I correct in saying he does not qualify as a dependent?

A. Not necessarily. "Pays us room and board each month at Fair Market Value" does not show that he pays more than half his own support. 

There are two types of dependents, "Qualifying Children"(QC) and Other ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test.

A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:

1. He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled (at any age)
2. He did not provide more than 1/2 his own support. Scholarships are excluded from the support calculation
3. He lived with the parent (including temporary absences such as away at school) for more than half the year

The support test is different for each type. The support test, for a QC, is only that the child didn't provide more than half his own support. The support test for a Qualifying Relative is that the taxpayer provided more than half the relative's support.

So, it doesn't matter how much income he has, . What matters is how much he spent on support. Money he put into savings does not count as support he spent on himself.

The support value of the home, provided by the parent, is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants.

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

See full dependent rules at: https://turbotax.intuit.com/tax-tools/tax-tips/Family/Rules-for-Claiming-a-Dependent-on-Your-Tax-Ret...

[AndrewA87]

I wonder if this getting too complicated.

My son receives ssdi and ssi only. About $10,000.

We were having him file a return each year just to be on the safe side.

I do not claim him as a dependent and now I am wondering if he should even bother with filing a return at all.

[DoninGA]

@AndrewA87 If the Social Security benefits he receives is his only income and there are no federal taxes withheld then there is no need for him to file a tax return.

Unless he also received a Form 1095-A for his health insurance through one of the State Marketplace Exchanges or from healthcare.gov then he must file a tax return.

[Hal_Al]

Also, it's doubtful that he does not qualify as your dependent with only $10,000 of potential self support funds.  You're missing out on the $500 "Other dependent credit".  

Furthermore, even if he had to file (and he doesn't),  with the tax law change, effective 2018, most dependents will have the same tax liability whether they claim themselves or not. The personal exemption has been eliminated and the standard deduction increased. 

[AndrewA87]

Since my son receives only SSDI and SSI should this be entered on line 1 or 23?

1. Enter the total funds belonging to the person you supported, including income received (taxable and nontaxable) and amounts borrowed during the year, plus the amount in savings and other accounts at the beginning of the year. Don't include funds provided by the state; include those amounts on line 23 instead

23. Enter the amount others provided for the person's support. Include amounts provided by state, local, and other welfare societies or agencies. Don't include any amounts included on line 1

[AndrewA87]

Also for lodging. If the house is paid off how do I calculate my son's portion of the lodging?

Would it be finding a similar house nearby that is up for rent and multiply that monthly rent by 12 and then divide by the number of people living in the house? 

[Hal_Al]

Q. Since my son receives only SSDI and SSI should this be entered on line 1 or 23?

A. Line 1.

Technically, SSDI is his money and would go on line 1.  SSI is more like welfare and could go on line 23.  But for simplicity, line 1 should work. 

Q. Would it be finding a similar house nearby that is up for rent and multiply that monthly rent by 12 and then divide by the number of people living in the house? 

A. Yes.

Try entering your address at a real estate web site, like Zillow.  They may have a rental value for your home.