Changing family dynamic may lead to tax relief

Published on NewsOK Modified: January 24, 2013 at 2:08 am •  Published: January 24, 2013
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"Unlike a qualifying child, a qualifying relative can be any age," the IRS says in its Publication 17.

Taxpayers can take an exemption of $3,800 for each qualified child or relative who is a dependent.

Here are some examples from the IRS:

"Your mother received $2,400 in Social Security benefits and $300 in interest. She paid $2,000 for lodging and $400 for recreation." If you spend more than $2,400 to support her, supplementing what she spends, and her annual income is less than $3,800, you can claim her as a dependent and take the full value of the exemption.

"Your brother's daughter takes out a student loan of $2,500 and uses it to pay her college tuition. She is personally responsible for the loan. You provide $2,000 toward her total support. You cannot claim an exemption for her because you provide less than half of her support."

Usually the items that go into determining support are the cost of housing, food, clothing and medical costs, including doctor bills and medicine

But it's not just the personal exemption that could help taxpayers. Individual taxpayers might qualify and get the "extra benefit" of filing as head of households if they legally can claim children, parents or relatives as a dependent, said Jackie Perlman, principal tax research analyst for H&R Block .

For example, the 15 percent tax bracket applies to taxable income up to $47,350 for heads of households and $35,350 for individual returns. At the 25 percent tax bracket, it's $133,300 for heads of households and $85,650 for single filers.

Steber said taxpayers have to understand that it's not just nuclear family members who might qualify. Think beyond children and parents. If you're providing half the support for an aunt or uncle, niece or nephew whose income for the year was under $3,800, you may be able to claim them as dependents.