21.5 Meeting the Support Test for a Qualifying Relative
To claim an exemption for a dependent as a qualifying relative (21.4), you must contribute more than 50% of the dependent’s total support for the year. You do not have to meet this support test to claim a child as your dependent under the qualifying child rules (21.3), but qualifying child status is denied if a child provides over half of his or her own support, and the support items listed below count when making that determination.
Meeting the support test.
Follow these steps to figure support: (1) Total the value of the support contributed by you, by the dependent, and by others for the dependent. Use the checklists later in this section for determining what to include in total support and what to exclude. (2) Determine your share of the total. If your share is more than 50% of the dependent’s total support, you meet the support test. It does not matter how many months or days you provided the support; only the total cost of the support is considered. You may not take the exemption if the dependent contributed 50% or more of his or her own support or 50% or more was contributed by others, including government sources.
Multiple support agreement. If the dependent or someone else did not contribute 50% or more of the support, and you contributed more than 10% of the total support, you may be able to claim the exemption under a multiple support agreement (21.6).
Divorced or separated parents contributing to support of their children should follow a special rule (21.7).
Checklist of Support Items
- Food and lodging; see below.
- Clothing
- Medical and dental expenses, including premiums paid for health insurance policies and supplementary Medicare
- Education expenses such as tuition, books, and supplies. If your child receives a student loan and is the primary obligor, the loan proceeds are considered his or her own support contribution. This is true even if you are a guarantor of the loan. Scholarships received by full-time students are not treated as support; see the checklist of nonsupport items in this section.
- Cars and transportation expenses. Include the cost of a car bought for a dependent as support. If you buy a car but register it in your own name, the cost of the car is not support provided by you, but any out-of-pocket expenses you have for operating the car are part of your support contribution.
- Recreation and entertainment. A computer or TV set bought for your child or other dependent is support. Also include costs of summer camp, singing and dancing lessons, and musical instruments, as well as wedding expenses.
Planning Reminder
Dependent’s income and personal savings may be support.
In figuring a person’s total support, include his or her taxable and tax-exempt income and personal savings if actually used for support items such as food, lodging, or clothing. Also include support items that are financed by loans. Income that is invested and not actually spent for support is not included in the earner’s total support.
Social Security. Social Security benefits (whether taxable or tax-exempt) received by your dependent are included in his or her total support only if they are actually spent on support items and not invested.
Social Security benefits paid to children of deceased workers that are used for their support are treated as the children’s contribution to their own support. Follow this rule even though benefits are paid to you as the child’s parent or custodian. If the Social Security benefits used for a child’s support are more than half of the child’s total support, no one may claim the child as a dependent.
Where husband and wife are paid Social Security benefits in one check made out in their joint names, 50% is considered to be used by each spouse unless shown otherwise.
Government benefits. In figuring whether you have provided more than 50% of the dependent’s support, you have to consider certain government benefits as support provided by a third party to the dependent. For example, welfare, food stamps, or housing payments based on need are support payments from the government if they are used for support of the dependent. G.I. Bill education assistance is support provided by the government.
Foster care payments by a child placement agency to parents are support provided by the agency and not by the parents. The value of board, lodging, and education provided to a child in a state juvenile home is treated as support provided by the state.
When a person joins the Armed Forces, the value of board, lodging, and clothing he or she receives is treated as the government’s support contribution. However, if you are in the Armed Forces, dependency allotments withheld from your pay and used to support your dependents are included in your support contributions for them. Also included in your support contribution is a military quarters allowance covering a dependent.
Planning Reminder
Lodging and food as support.
The dependent’s total support includes the fair rental value of a room, apartment, or house in which the dependent lives. In your estimate of fair retail value, include a reasonable allowance for the rental value of furnishings and appliances, and for heat and other utilities. You do not add payments of rent, taxes, interest, depreciation, paint, insurance, and utilities. These are presumed to be accounted for in the fair rental estimate. The fair rental value of lodging you furnish a dependent is the amount you could reasonably expect to receive from a stranger for the lodging.
Does dependent live in his or her own home? If a dependent lives in his or her own home, treat the total fair rental value as his or her own contribution to support. However, if you help maintain the home by giving cash, or you directly pay such expenses as the mortgage, real estate taxes, fire insurance premiums, and repairs, you reduce the total fair rental value of the home by the amount you contributed when figuring his or her own support contributions; see the Example below.
If you lived with your dependent rent-free in his or her home, the fair rental value of lodging furnished to you must be offset against the amounts you spent for your dependent in determining the net amount of your contribution to the dependent’s support.
Planning Reminder
| Fair rental value of house | |
| ($8,000 less $4,600 you gave for taxes) | 3,400 |
| Social Security spent | 3,000 |
| Father’s contribution to his own support | $6,400 |
Food and other similar household expenses. If the dependent lives with you, you divide your total food expenses equally among all the members of your household, unless you have records showing the exact amount spent on the dependent; see the Examples at the end of this section. If he or she does not live with you, you count the actual amount of food expenses spent by or for that dependent.
Do you pay for a relative’s care in a health facility? If you pay part of a relative’s expenses for care in a nursing home or other facility, your payment is a support contribution. If you make a lump-sum contribution covering a relative’s stay in an old-age home or other care facility, you prorate your payment over the relative’s life expectancy to determine the current support contribution.
Checklist of Items Not Counted as Support of Dependent
- Federal, state, and local income taxes and Social Security taxes paid by the dependent from his or her own income
- Funeral expenses
- Life insurance premiums
- Medicare Part A (basic Medicare) and Part B (Supplementary Medicare benefits). In one case the IRS argued that Medicaid benefits were includible in total support but the Tax Court disagreed, holding that Medicaid is similar to excludable Medicare benefits.
- Medical insurance benefits received by the dependent
- Scholarships received by your child, stepchild, or legally adopted child who is a full-time student for at least five calendar months during the year. Scholarship aid is counted as support contributed by the child if he or she is not a full-time student for at least five months. Naval R.O.T.C. payments and payments made under the War Orphans Educational Assistance Act are scholarships that are not counted as support. State aid to a disabled child for education or training, including room and board, is a scholarship.
Allocating Support
The Examples below illustrate how you should allocate various support items when your contributions benefit more than one person or when your dependent provides part of his or her own support.
Earmarking support to one dependent.
If you are contributing funds to a household consisting of several persons and the amount you contribute does not exceed 50% of the total household support, you may be able to claim an exemption for at least one dependent by earmarking your support to his or her use. Your earmarked contributions must exceed 50% of this dependent’s support costs. Mark your checks for the benefit of the dependent, or provide the dependents with a written statement of your support arrangement at the time you start your payments. If you do not designate for whom you are providing support, your contribution is allocated equally among all members of a household.
Planning Reminder
| Social Security used for support | $4,900 |
| Share of food costs (1/6 of $6,600) | 1,100 |
| Dental bill paid by you | 500 |
| Rental value of room | 3,600 |
| $10,100 |
| Father | Mother | |
| Fair rental value of room | $1,500 | $1,500 |
| Pension used for their support | 2,600 | 2,600 |
| Share of food costs (1/6 of $6,000) | 1,000 | 1,000 |
| Medical expenses for mother | _____ | 600 |
| $5,100 | $5,700 |