r2i forum

Does this mean we can get the tax break ?? or the same rule of social securirty number applies ??

If you care for aging parents, you may be due a tax break


NEW YORK (MarketWatch) -- If you care for an aging parent, you're not alone. The National Alliance for Caregiving and the AARP estimate that 21% of all American adults care for other adults. Seven million Americans take care of someone 55 or older and live at least an hour away, a Pew Center study reports. And that number is growing -- it is expected to double within 15 years.
There is some tax relief for adult children who support their aging parents. You can reduce your 2006 taxable income by $3,300 if you claim a parent as your dependent.
So how do you know if you can get the exemption? There are three tests to determine if your parent is eligible to be your dependent. The first one is obvious-- what's his or her relationship to you? To qualify, he or she must be a parent or stepparent.
Second, you must provide more than half of your parent's support. If your parent lives with you, you must determine how much you're spending on shelter, food and medicine. (But if your parent receives Social Security benefits, make sure your contribution truly adds up to more than half.)
If your parent doesn't live with you, you should account for what you pay to support the parent in his or her home or in an assisted living facility. But check with the IRS to make sure you're in agreement over what is considered "support." Certain items such as appliances or cars may not always be counted. Visit www.irs.gov for a copy of the IRS publication "Exemptions, Standard Deduction, and Filing Information" to determine what types of support contributions qualify.
Finally, the parent's gross income must be less than the personal exemption ($3,300 for 2006 and $3,400 for 2007). But any income that comes from Social Security doesn't count toward that total; neither do disability payments, according to Kiplinger's personal finance expert Kimberly Lankford. Do pay attention to your parent's investments, however. The interest and dividends earned from stocks, bonds and savings accounts all count.
If you share the responsibility for your parents with other adult siblings, you may be eligible for the IRS multiple-support declaration. In this case, only one sibling can claim the parent as a dependent, but you can vary which sibling makes the claim each year. End of Story

This is nothing new. They have to meet the dependency tests that IRS has to be claimed as a dependent and they cannot claim their own exemption if they are filing taxes due to social security payments. There is nothing new, that rule has been there for ages in the IRS code.

My parents visited us from India last year for 6 months.
If I want to claim this excemption, I need to fill in a Tax-ID or SSN.

not sure how to do this. Can we still apply withotu one of these ?

They have to have ITIN and must be a citizen or a resident of USA, Canada or Mexico.

You can go to IRS publication for detailed rules or go to the following link and

read http://www.wwwebtax.com/miscellaneous/exemptions.htm

In one of the radio show in Dallas they were talking about some law change for dependent claim and they mentioned that even if parents are here for 33 days u can claim as dependent and if they are with u for 185 days in last 3 yrs u can claim as dependent as long as u have ITIN , I need to again go thru dependent requirement , Is anyone else aware of anything like that ?

Here is the link from IRS website , for Resident alien

http://www.irs.gov/taxtopics/tc851.html

You are considered a resident alien if you met one of two tests for the calendar year.

The first test is the "green card test." If at any time during the calendar year you were a lawful permanent resident of the United States according to the immigration laws, and this status has not been rescinded or administratively or judicially determined to have been abandoned, you are considered to have met the green card test.

The second test is the "substantial presence test." To meet this test, you must have been physically present in the United States on at least 31 days during the current year, and 183 days during the 3 year period that includes the current year and the 2 years immediately before. To satisfy the 183 days requirement, count all of the days you were present in the current year, and one?third of the days you were present in the first year before the current year, and one?sixth of the days you were present in the second year before the current year. Do not count any day you were present in the United States as an "exempt individual" or commute from Canada or Mexico to work in the United States on more than 75% of the workdays during your working period. An exempt individual may be anyone in the following categories:

Desi - need ur help here , trying to understand , I thought we always says that parents needs to be here for 183 days or more to claim as depenedent, but the requirement above has some different guide lines mentioned above.

If u can clarify little more , for example my parents were in US in 2005 for 5.5 months and in 2004 around 6.5 months , Can I claim them as dependent in my 2006 returns ? Doesn't sound like that I can claim but it is better to check with experts :)

Hawapani,

To claim anyone as a dependent, they must meet all the five dependency tests. I have posted a link earlier in the thread for the five tests. You need to go down the list for each of those dependency tests which include over 50% support.

For whether they meet the residency test,. I suggest that you read the following tax topic:

http://www.irs.gov/taxtopics/tc851.html

The following is an excerpt from above:

Even if you meet the substantial presence test, you can be treated as a nonresident alien if you are present in the United States for fewer than 183 days during the current calendar year, you maintain a tax home in a foreign country during the year, and you have a closer connection to that country than to the United States. This does not apply if you have applied for status as a lawful permanent resident of the United States, or you have an application pending for adjustment of status.

If your parents have come on a tourist visa, then it could be argued that they have a closer connection to India. If they have property, taxable income and are filing taxes in India, it could be argued that their tax home is in India. Lastly you have to total up the dates per what you posted and see if they add up to 183 and at least 31 days must be from 2006. Plus the "one third" and "One sixth" for 2005 and 2004 makes it tough to meet the requirement which you have to total it up.

In addition, you have to show that you paid for more than 50% of their support for 2006.

Hope it is clear.

Thanks a bunch DesiBabu :)

Friends

Last year (2005) returns, I claimed parents as depedents.
This year (2006) return, they meet all the conditions to be clamied as resident.

Following text from tax topic 851,made me to think:


"Also, do not count any days you intended to leave, but could not leave the United States because of a medical condition that developed while you were in the United States. Even if you meet the substantial presence test, you can be treated as a nonresident alien if you are present in the United States for fewer than 183 days during the current calendar year, you maintain a tax home in a foreign country during the year, and you have a closer connection to that country than to the United States. This does not apply if you have applied for status as a lawful permanent resident of the United States, or you have an application pending for adjustment of status. "

Parents left US in March 2006 and have not visited us since. Can IRS interpret this as having closer connection to India since they lived there? Whenever they visited us, they came under visitor visa. Can experts here, please comment?

Thank you

Cool