Your Tax Questions Answered
Dealing with Dependents
Kiplinger editorial director Kevin McCormally and fellow tax experts Peter Blank and Mary Beth Franklin tackle your most pressing tax challenges.
By Kevin McCormally, Editorial Director, Kiplinger.com
February 17, 2010
QUESTION: My ex-wife lives with me. She can not find a job and has no income. I have been paying all her and my expenses -- can I claim her as a dependent on my 2009 return? She has lived with me all year.
KEVIN ANSWERS: Sounds like you qualify to claim her as a dependent as a "qualifying relative"...even though she's not related to you. You get around that test if the person lives with you all year round. Other keys: She can't have gross income during 2009 of more than $3,650 and you must have provided more than half of her support.
Again, based on the info in your e-mail, it looks like you qualify to claim her. That will knock $3,650 off your taxable income. See all the rules at this IRS link.
QUESTION: I paid for dental work for my 75 year old father. Is there any way to take a tax deduction for this?
KEVIN ANSWERS: Only if he qualifies as your dependent. The keys to qualifying is that you provided more than half of his support in 2009 and his income (not including nontaxable Social Security benefits) was less than $3,650.
If he qualifies as your dependent, you can add his dental bills that you paid to your other unreimbursed medical expenses and claim a deduction to the extent that the total exceeds 7.5% of your adjusted gross income.
QUESTION: My husband requires 24 hr care and is considered custodial, is the cost of that care a tax deduction and if so, how?
KEVIN ANSWERS: If your husband is in a nursing home or similar facility primarily for medical reasons, then the full cost can qualify as a deductible medical expense. If he’s in such a facility primarily for custodial – not medical reasons – then the cost of the medical care is deductible but not the cost of food and lodging. An official of the facility should be able to provide a breakdown.
If custodial care is being provided at home, the expenses might qualify as medical expenses. Check out IRS Publication 502 for more details.
You must itemize deductions using Schedule A – rather than claim the standard deduction—and such costs are deductible only to the extent that unreimbursed expenses exceed 7.5% of your adjusted gross income. If your AGI for the year is $50,000, that means the first $3,750 of medical expenses have no tax-saving power.
If you pay for care to enable you to work, you may qualify to claim the child and dependent care credit, using form 2441. The credit is worth between 20% and 35% of up to $3,000 of qualifying care expenses paid for an individual. You can get more information in IRS Publication 503.
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Reader Comments (5)
Posted by: Jim Campbell at 02/17/2010 03:45:00 PM
What are the rules and restrictions for gifting my children with stock or cash?
Posted by: Howard L. at 02/18/2010 09:52:09 AM
I purchased a classic car to fix up and sell at a Scottsdale Collector Car Auction. I spent over $60,000 for professional parts and labor. The car sold for $54,000. Since I lost money do I owe any tax? This was a one time event.
Posted by: Wanda Venters at 02/18/2010 11:10:14 AM
There seem to be different answers to the question of claiming yourself on a 1040. Can you claim yourself even though another person (a parent) could claim you but doesn't?
Posted by: kevin mccormally at 02/18/2010 07:51:18 PM
Kevin McCormally of Kiplinger here with an answer for Jim Campbell who wonders about the rules for gifting cash or stock to his children. You can give up to $13,000 each year to any number of people without worrying about the federal gift tax. A husband and wife can each give the same person up to $13,000 or, if one spouse agrees not to make any gifts to a certain person, the other spouse can give up to $26,000. For gifts above the $13,000 level, everyone has a credit that's big enough to cover the tax bill on the first $1 million of lifetime taxable gifts. After that, gifts are taxed at rates up to 35%. In the past, any part of the credit used to protect gifts from the tax during your lifetime was deducted from the credit that protects assets from the estate tax at death. Right now, of course, there is no estate tax because Congress allowed it to expire at the end of 2009. We consider it certain that Congress will ultimately reinstate the estate tax retroactive to January 1 and there will again be some sort of interaction between the gift and estate tax.
Posted by: Komba Yomba at 04/11/2010 04:05:18 AM
...Can my wife and I file separate(ly?)...and my second question...I took a job in another city, I want to take advantage of the "First Time Home Buyer" Program all by myself would that affect my status when I file marriage but filing separate next year? Thank you and I look forward to your response