Reporting social security

[jyeh74]

@xmasbaby0 for someone else.  But $15-20 interest inclme is greater than $0 right?  You said $0 for married filing separately so I’m confused.  File or don’t file. 

[jyeh74]

@xmasbaby0 I think this is the situation.  Elderly couple of husband and wife.  No income.  For years they have been claimed as dependents.  Daughter claims mom as her dependent.  Son claims dad as his dependent.  Elderly couple starts receiving social security money SSA-1099.   Somewhere around $10k each a year.  They don’t have any other income but could have 1099-INT from banks.  Maybe $10-15 annually which would put them over the $0 you mentioned.

But technically they aren’t filing taxes as married filing jointly or married filing separately.  Do they have to report the $10k + $10k = $20k that they jointly receive from their social security?  With the $10-15 interest income?  They will either be both claimed as dependent by the son this year or continued as dad claimed as dependent by son and mom claimed as dependent by daughter. 

[xmasbaby0]

WHY are they filing tax returns if their only income was SS and a few dollars of interest?   What are they trying to accomplish?  And why separate returns?

[xmasbaby0]

These folks do NOT have to file tax returns.    If they are being supported by their adult child, the Social Security income they are receiving does not "count" and keep them from being claimed as dependents.   They have no need to file jointly or separately.    They should all just continue on as they have been----adult child can claim them as dependents and the older folks do not file tax returns.

[jyeh74]

@xmasbaby0 My thoughts exactly.  They have not been reporting taxes at all because they don’t have income.  Until they started receiving social security money and the interest income.  Now they are wondering if they need to report the social security income?  

Didn’t that link say if half of the social security income ($20k or so annually for both people) + other sources of income ($15 interest income from bank) = $10k or so.

If married filing jointly has to be more than $32,000 to file taxes.  

If married filing separately has to be more than 0 to file taxes.

[jyeh74]

It makes sense logically but where does it state on IRS website that if you are claimed as a dependent, then your social security incomes doesn’t “count” as income?  So they are t subject to that $25,000 (single or head of household) or $32,000 (married filing jointly) or $0 (married filing separately) income tiers?

[xmasbaby0]

Just stop.    You do not say how you are involved.   Are these your parents?   Or someone else's parents?   These elderly people do NOT need to file tax returns.  Period.   And if they are being supported by adult children, those adult children can continue to claim them as dependents and forget about the Social Security and/or the few dollars of interest income they receive.

Here is the criteria for the adult child(ren) who are claiming the elderly parents as dependents.  The parents can be claimed as "qualifying relatives."

WHO CAN I CLAIM AS A DEPENDENT?

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 $4,700 in 2023 NOT counting Social Security.
• 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.

Related Information:

• What does "financially support another person" mean?

[xmasbaby0]

And....this was given to you already----but here is it is again.   Go through this as if you are the "adult child" who wonders if you can claim Mom or Dad as a dependent.

IRS interview to help determine who can be claimed:

https://www.irs.gov/help/ita/who-can-i-claim-as-a-dependent

https://ttlc.intuit.com/questions/3113432-who-can-i-claim-as-my-dependent  

[jyeh74]

Why does it matter if these are my parents or someone else’s parents?  Maybe I’m asking for a friend who doesn’t know English and can’t go online or ask someone.  Maybe I’m asking for my boyfriend’s family. Why does it matter?  

Thank you for the information. 

[xmasbaby0]

Please take more time to read the information that has been given to you more thoroughly so you can process and understand it.    It is nice that you are trying to help someone.   The bottom line is that those old folks do not need to file tax returns.

[Hal_Al]

Q. Why does it matter if these are my parents or someone else’s parents?

A. If they're your parents, it doesn't matter where they live. If they're an unrelated person, they must live with you all year to qualify as a dependent. 

[jyeh74]

Here is the link on who qualifies as a qualifying relative for a dependent. All other conditions have been met.  The only unsure part is the part about making gross income of $4300 or less. Social security income is more than $4300 a year.

https://apps.irs.gov/app/vita/content/globalmedia/overview_of_the_rules_for_claiming_4012.pdf

Under section 3

The person’s gross income for the year must be less than $4,300.  Gross income means all income the person received in the form of money, goods, property and services, that isn’t exempt from tax.  Don’t include Social Security benefits unless the person is married filing a separate return and lived with their spouse at any time during the tax year or if 1/2 the Social Security benefits plus their other gross income and tax exempt interest is more than $25,000 ($32,000 if MFJ).

However I’m not clear on the last statement.  It says don’t include social security benefits (which I’m assuming is the 1099-SSA) unless they are filing married filing separately and live with the spouse?  If they are being claimed as dependents, they should NOT be filing any taxes at all.  Not separately, not jointly.  So none of the conditions even matter.  

[Hal_Al]

The standard deduction for a person filing Married filing separately (MFS) is $13,850 (more of over age 64).  If their individual SS (plus any other little income) is less than that, they would normally not need to file.

But, I think you said they are being claimed as a dependent. The filing requirement for a dependent with unearned income is only $1250 ($2750 if over 64). So, they would have to file a tax return, report their social security (the more than $0 rule) and actually pay tax if they file separately.

Since they will owe no tax, if they file as Married filing Jointly (MFJ), they can still be claimed as dependents even if they file as MFJ. So, they can be claimed as dependents and not have to file as MFS to be dependents. 

BOTTOM LINE (I think): They do not have to report  their SS as income, they do not have to file tax returns and they can still be dependents. 

Nontaxable Social security doesn't count as income, for the income test, but social security money they spends on themselves does count as support not provided by you, for the support test. Money they put into savings & investment does not count as support they spent on themselves.

[xmasbaby0]

You dug up old information.   The amount is now $4700 of income.  (not $4300)    That refers to any income OTHER than Social Security income.   So....as stated to you, the few dollars of interest do not exceed $4700, and does not interfere with the adult child claiming them.  These  "elderly" people are not required to file a tax return.   The parents did not have enough income to be required to file a tax return.  Not a joint return.  Not separate returns.   

The adult child who claims them gets a $500 credit for other dependents on their own return, which reduces their own tax liability.   

This  is what the adult child gets:

https://ttlc.intuit.com/questions/4499708-what-is-the-500-credit-for-other-dependents-family-tax-cre...

[jyeh74]

It’s interesting that when an elderly couple receives more than a combined $32,000 per year from social security income, they have to file taxes jointly and report it.  But when the elderly couple is claimed as a qualifying dependent, then that social security income does NOT count as income and is subject to income of $4,700 or under per person rule.