Caregiver Tax Advice

Posted by Lee Reams Sr. on

When a taxpayer is helping to support both parents and is having difficulty showing that he or she provided over half of the support for both, it may be appropriate for the taxpayer to designate the support to only one of the parents. This could help overcome the more than 50% dependency support requirement for one of them, thus allowing an exemption deduction. 

If the taxpayer is single, being able to claim the parent as a dependent could possibly allow the taxpayer to use the head of household filing status.  To qualify for this break, the taxpayer must maintain a household that constitutes the principal abode of one or both of his parents, and at least one of the parents must be the taxpayer's dependent, i.e., must individually have gross taxable income for the year of less than the personal exemption amount and receive over half of his or her support from the taxpayer. The taxpayer need not reside in the household he or she maintains for the parents. The home could even be a retirement home or care facility.

To accomplish this, the taxpayer must be able to provide proof that the support is for one of the parents only.  Otherwise, the support will be designated as a “fund” equally allocated to both. The IRS suggests a notation on a check as an acceptable designation procedure. It says, “Notations by the maker on support checks purporting to allocate funds to particular household members made payable to an individual having custody of a claimed dependent, will be regarded as evidence of actual support” (Rev Rul 72-591, 1972-2 CB 84).