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.
- Support with expenses. Your relative must have received support for more than half of his or her living expenses. This kind of support includes providing food, clothing, and housing. Also, paying for medical and dental care, transportation, recreation, etc.