Are you helping support a loved one? Perhaps you and several family members are each giving a little bit. Don't overlook a potential tax benefit. One of you may be able to claim the elder as a dependent.
First, your loved one must meet IRS guidelines to qualify as a dependent:
- Income. In 2012, his or her taxable income must have been less than $3800 for the year. This includes pension benefits, interest, and dividends from investments. Also, withdrawals from retirement savings plans. Social Security benefits are typically not counted.
- Relationship. Immediate family members can be dependents, such as a parent or sibling. Another family relative may also be a dependent. For instance, an in-law or stepparent will qualify. Even nonrelatives can be a dependent if they lived with you all year.