If you are helping support your parents, you may be having difficulty showing that you provided over half of the support for both of them, thus failing to qualify for the dependency exemptions (and for the beneficial head of household filing status if you are an unmarried taxpayer).

You may overcome this problem by designating the support to only one of your parents. This may allow you to claim at least one of them as your dependent and, if you are unmarried, allow you to file as head of household.

To qualify for the head of household filing status, a taxpayer must maintain a household that constitutes one or both of his or her parents’ principal abode, 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 $4,050 for 2017 (for same as 2016) and receive over half of his or her support from the taxpayer. The taxpayer himself need not reside in the household he or she maintains for the parents. The home could even be a retirement home or 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. According to the IRS, written statements contemporaneous with the expenditures of support funds setting forth the amounts and purposes of such expenditures are entitled to great weight in supporting the designation to a specific individual. Thus, a notation on a check may be an acceptable designation procedure as long it designates who it is for and the purpose of the funds.

Although having no effect on filing status, when several people together provide over 50% of support, all who provide more than 10% of the support can agree about which of them will claim the dependent. Of course, the agreeing parties must also otherwise qualify to claim the dependent. Each person who is relinquishing the dependent exemption must complete an IRS-required form for attachment to the return claiming the dependent.

If you are supporting both parents and would like to discuss how the foregoing might apply to your specific situation, please give this office a call.

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