Question About Claiming Parent as Dependent

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Ron Ronnerson
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Question About Claiming Parent as Dependent

Post by Ron Ronnerson » Wed Feb 26, 2014 8:31 pm

Hi Everyone,

Here is our situation. My mother (66 years old) lives with my wife and me (we’re both 39). My wife and I support my mom financially but mom did have some dividend and interest income in 2013. The interest was about $200 and the dividends were about $5400. She doesn’t receive social security and had no other income. I had questions regarding taxes:
1) Can we claim my mom as a dependent or not?
2) Also, does the source of the income (such as dividends vs. earned income) have any impact on whether or not a parent can be claimed as a dependent?
3) Does mom need to file taxes for 2013?

If any additional information is needed, please let me know. I greatly appreciate any help.

Last but not least, just wanted to say thank you! - I’ve learned a great deal from this forum.

Thanks,
Ron

MN Finance
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Re: Question About Claiming Parent as Dependent

Post by MN Finance » Wed Feb 26, 2014 8:38 pm

Did you Google who can be claimed as a dependent? It will only take one or two clicks to get your answer, I'm sure.

AlskarSverige
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Re: Question About Claiming Parent as Dependent

Post by AlskarSverige » Wed Feb 26, 2014 8:43 pm

Check out http://www.irs.gov/uac/Who-Can-I-Claim- ... pendent%3F The website has an interactive questionnaire that will determine whether a person qualifies as a dependent. In this case because of the income above 3900, I don't think they will, but you should verify yourself.

I do volunteer tax prep work, but unfortunately I don't have the flowcharts to properly determine the status with me.

HTH.

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Ged
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Re: Question About Claiming Parent as Dependent

Post by Ged » Wed Feb 26, 2014 8:53 pm

I don't think you can claim her as a dependent. Her income is greater than the personal deduction.

She probably does not need to file a tax return.

Here is where to figure out for sure:

http://www.irs.gov/Individuals/Do-You-N ... turn%3F-11

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damjam
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Re: Question About Claiming Parent as Dependent

Post by damjam » Wed Feb 26, 2014 8:54 pm

Because Mom has taxable income greater than $3,900, you can not claim her as a dependent. Sorry :|

Dividends vs. earned income has no impact. It is dependent on taxable income vs. non taxable income.

Ron Ronnerson
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Re: Question About Claiming Parent as Dependent

Post by Ron Ronnerson » Wed Feb 26, 2014 9:18 pm

Thanks for the responses, everyone. The links were very helpful as well. By the way, I did start by doing a Google search prior to posting but found some unclear information so just thought I'd make sure I was understanding things correctly. Our living situation changed not that long ago with mom moving in so this stuff is new to us. Thanks for your patience in answering what I know were likely pretty simple questions.

I have a clear understanding now so thanks again.

All the best,
Ron

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HueyLD
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Re: Question About Claiming Parent as Dependent

Post by HueyLD » Wed Feb 26, 2014 9:34 pm

..............
Last edited by HueyLD on Sat Feb 07, 2015 8:27 pm, edited 1 time in total.

Calm Man
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Re: Question About Claiming Parent as Dependent

Post by Calm Man » Wed Feb 26, 2014 9:38 pm

OP, more important, shouldn't she apply to get social security?

sscritic
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Re: Question About Claiming Parent as Dependent

Post by sscritic » Wed Feb 26, 2014 9:42 pm

Calm Man wrote:OP, more important, shouldn't she apply to get social security?

She may not qualify.

Ron Ronnerson
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Re: Question About Claiming Parent as Dependent

Post by Ron Ronnerson » Wed Feb 26, 2014 9:52 pm

sscritic is correct. Mom doesn't qualify for social security.

Ron Ronnerson
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Re: Question About Claiming Parent as Dependent

Post by Ron Ronnerson » Wed Feb 26, 2014 10:00 pm

Huey,

Thanks for the information and link. While we can't deduct medical expenses for mom in 2013 (those expenses were less than 10% of our AGI), this information is definitely good to know for future reference.

Thanks,
Ron

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HueyLD
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Re: Question About Claiming Parent as Dependent

Post by HueyLD » Wed Feb 26, 2014 10:05 pm

...............
Last edited by HueyLD on Sat Feb 07, 2015 8:28 pm, edited 1 time in total.

Penguin
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Re: Question About Claiming Parent as Dependent

Post by Penguin » Wed Feb 26, 2014 11:10 pm

Is it possible that your mom may qualify for SSI or Medicaid?
Jon

Ron Ronnerson
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Re: Question About Claiming Parent as Dependent

Post by Ron Ronnerson » Wed Feb 26, 2014 11:52 pm

HueyLD wrote:Did you include all out of pocket medical, dental, prescriptions, vision, insurance premiums, etc. for all members of your family?


Yes, our out-of-pocket expenses are lower than 10% of AGI even with all of the above included. I suppose that's not a bad thing, despite not qualifying for a tax break.

Penguin wrote:Is it possible that your mom may qualify for SSI or Medicaid?


We filled out a Medicaid application once before and my mom didn't qualify at the time. At that time, however, she was being claimed as a dependent. Now that she can no longer be claimed as a dependent, do you think this could make a difference in her eligibility for Medicaid?

My mom never worked and dad only had 9 years of work history prior to his passing away so social security admin said she doesn't qualify for s.s. benefits.

Draak
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Re: Question About Claiming Parent as Dependent

Post by Draak » Thu Feb 27, 2014 12:14 am

delete
Last edited by Draak on Sun Mar 16, 2014 2:31 am, edited 1 time in total.

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BL
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Re: Question About Claiming Parent as Dependent

Post by BL » Thu Feb 27, 2014 12:25 am

The dividends indicate she has a portfolio which throws off the dividend. this may eliminate Medicaid until she spends down resources. States vary so it is a good idea to check it out.

Ron Ronnerson
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Re: Question About Claiming Parent as Dependent

Post by Ron Ronnerson » Thu Feb 27, 2014 9:43 am

Draak and BL: We'll check to see if Medicaid is an option at this point. Really appreciate the suggestion. Thank you!

jared
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Re: Question About Claiming Parent as Dependent

Post by jared » Thu Feb 27, 2014 11:11 am

damjam wrote:Because Mom has taxable income greater than $3,900, you can not claim her as a dependent. Sorry :|

Dividends vs. earned income has no impact. It is dependent on taxable income vs. non taxable income.


Actually, the income test is based on gross income. It's true that some items are specifically excluded from gross income, but taxable income would not be the correct terminology. As an example, if Mom received $10,000 in rents with $9,000 of expenses, her net income is only $1,000. However, she would not meet the definition of a qualifying relative because her gross income is greater than $3,900.

pshonore
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Re: Question About Claiming Parent as Dependent

Post by pshonore » Thu Feb 27, 2014 11:42 am

jared wrote:
damjam wrote:Because Mom has taxable income greater than $3,900, you can not claim her as a dependent. Sorry :|

Dividends vs. earned income has no impact. It is dependent on taxable income vs. non taxable income.


Actually, the income test is based on gross income. It's true that some items are specifically excluded from gross income, but taxable income would not be the correct terminology. As an example, if Mom received $10,000 in rents with $9,000 of expenses, her net income is only $1,000. However, she would not meet the definition of a qualifying relative because her gross income is greater than $3,900.
Suppose Mom received 12K in SS benefits (she actually is not eligible). Assuming none was taxable, that would not be considered exceeding the $3900 limit. Of course if Mom spent the 12K on herself instead of banking it, you might have a problem claiming you provided more than half of her support

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BL
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Re: Question About Claiming Parent as Dependent

Post by BL » Thu Feb 27, 2014 12:11 pm

EDT:
The number of credits needed to provide benefits for survivors depends on the worker's age when he or she dies. The younger a person is, the fewer credits he or she must have for family members to receive survivors benefits. But no one needs more than 40 credits (10 years of work) to be eligible for any Social Security benefit.


I am curious (no need to answer except to yourself) why she is neither eligible for SS nor has a pension. Usually people have one or the other. I guess that is the disadvantage of a non-working spouse not picking up enough covered work to get in the 10 yr credit required to draw something.
Last edited by BL on Thu Feb 27, 2014 1:13 pm, edited 1 time in total.

Penguin
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Re: Question About Claiming Parent as Dependent

Post by Penguin » Thu Feb 27, 2014 12:12 pm

Ron Ronnerson wrote:My mom never worked and dad only had 9 years of work history prior to his passing away so social security admin said she doesn't qualify for s.s. benefits.

Correct me if I am wrong, but I think it is not necessary to qualify for social security in order to qualify for SSI (Supplemental Security Income). Your mom must be 65 and poor in order to qualify. There are some other rules.
http://www.ssa.gov/ssi/text-eligibility-ussi.htm
Jon

pshonore
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Re: Question About Claiming Parent as Dependent

Post by pshonore » Thu Feb 27, 2014 12:17 pm

Penguin wrote:
Ron Ronnerson wrote:My mom never worked and dad only had 9 years of work history prior to his passing away so social security admin said she doesn't qualify for s.s. benefits.

Correct me if I am wrong, but I think it is not necessary to qualify for social security in order to qualify for SSI (Supplemental Security Income). Your mom must be 65 and poor in order to qualify. There are some other rules.
http://www.ssa.gov/ssi/text-eligibility-ussi.htm

Here are the eligibilty reqmts for SSI. http://www.ssa.gov/ssi/text-eligibility-ussi.htm
If I'm reading it right, it appears Mom is far over the 2K limit.

Penguin
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Re: Question About Claiming Parent as Dependent

Post by Penguin » Thu Feb 27, 2014 12:22 pm

pshonore wrote:If I'm reading it right, it appears Mom is far over the 2K limit.

I thought the $2000 limit was for assets. I missed the part of the thread that listed the mom's assets.
Jon

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Re: Question About Claiming Parent as Dependent

Post by pshonore » Thu Feb 27, 2014 12:46 pm

She has $5400 in dividend income which suggests she has holdings exceeding $100K

Penguin
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Re: Question About Claiming Parent as Dependent

Post by Penguin » Thu Feb 27, 2014 12:51 pm

pshonore wrote:She has $5400 in dividend income which suggests she has holdings exceeding $100K

Good thinking. Thanks.
Jon

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Re: Question About Claiming Parent as Dependent

Post by sscritic » Thu Feb 27, 2014 1:45 pm

BL wrote:EDT:
The number of credits needed to provide benefits for survivors depends on the worker's age when he or she dies. The younger a person is, the fewer credits he or she must have for family members to receive survivors benefits. But no one needs more than 40 credits (10 years of work) to be eligible for any Social Security benefit.

I am curious (no need to answer except to yourself) why she is neither eligible for SS nor has a pension. Usually people have one or the other. I guess that is the disadvantage of a non-working spouse not picking up enough covered work to get in the 10 yr credit required to draw something.

BL's quote is correct that the worker doesn't need 40 quarters under some circumstances to provide survivor benefits to the survivors.
How many QCs you need to be fully insured.
(1) You need at least 6 QCs but not more than 40 QCs to be fully insured. A person who died before 1951 with at least 6 QCs is fully insured.
...
(3) A person who is otherwise eligible for survivor's benefits and who files an application will be entitled to benefits based on your earnings if you die fully insured. You will be fully insured if you had one QC (whenever acquired) for each calendar year elapsing after 1950 or, if later, after the year you became age 21, and before the earlier of the following years:
(i) The year you die;
or
(ii) The year you reach retirement age as shown in paragraph (b)(2) of this section.

Example: born in 1946, died in 1980 at age 34. Since the person turned 21 in 1967, we start counting in 1968, the year after the year the person became 21: 68, 69, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79 (the last year before the year of death). That makes 12. The person needed 12 QCs. This is shown in the table at this link. Look in column V for age in year of death then back to column III for QCs required.
http://www.socialsecurity.gov/OP_Home/c ... 4-0115.htm

Now we don't know at what age the father immigrated to this country, so if he arrived in 1979 and died in 1980, he wouldn't have 12 QCs.

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