| Pub. 17, Your Federal Income Tax |
2004 Tax Year |
Chapter 3 - Personal Exemptions and Dependents
This is archived information that pertains only to the 2004 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
What's New for 2004
Exemption amount. The amount you can deduct for each exemption has increased from $3,050 in 2003 to $3,100 in 2004.
Exemption phaseout. You lose all or part of the benefit of your exemptions if your adjusted gross income is above a certain amount. The amount
at which this phaseout
begins depends on your filing status. For 2004, the phaseout begins at $107,025 for married persons filing separately, $142,700
for single
individuals, $178,350 for heads of household, and $214,050 for married persons filing jointly or qualifying widow(er)s. See
Phaseout of
Exemptions, later.
What's New for 2005
Dependency exemption. Beginning in 2005, you will use new rules to determine whether you can claim an exemption for a dependent. For details, see
Publication 553,
Highlights of 2004 Tax Changes.
Introduction
This chapter discusses exemptions. The following topics will be explained.
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Personal exemptions — You generally can take one for yourself and, if you are married, one for your spouse.
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Exemptions for dependents — You must meet five dependency tests for each exemption you claim for a dependent. If you are entitled
to
claim an exemption for a dependent, that dependent cannot claim a personal exemption on his or her own tax return.
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Phaseout of exemptions — You get less of a deduction when your adjusted gross income goes above a certain amount.
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Social security number (SSN) requirement for dependents — You must list the social security number of any dependent for whom
you claim
an exemption.
Deduction.
Exemptions reduce your taxable income. Generally, you can deduct $3,100 for each exemption you claim in 2004. But,
you may lose the benefit of part
or all of your exemption if your adjusted gross income is above a certain amount. See Phaseout of Exemptions, later.
How you claim an exemption.
How you claim an exemption on your tax return depends on which form you file.
If you file Form 1040EZ, the exemption amount is combined with the standard deduction amount and
entered on line 5.
If you file Form 1040A or Form 1040, follow the instructions for the form. The total number of
exemptions you can claim is the total in the box on line 6d. Also complete line 26 (Form 1040A) or line 41 (Form 1040) by
multiplying the total number
of exemptions shown in the box on line 6d by $3,100. If your adjusted gross income is more than $107,025, see Phaseout of Exemptions,
later.
Useful Items - You may want to see:
There are two types of exemptions: personal exemptions and exemptions for dependents. While each is worth the same amount
($3,100 for 2004),
different rules apply to each type.
You are generally allowed one exemption for yourself and, if you are married, one exemption for your spouse. These are called
personal exemptions.
You can take one exemption for yourself unless you can be claimed as a dependent by another taxpayer.
Single persons.
If another taxpayer is entitled to claim you as a dependent, you cannot take an exemption for yourself. This is true
even if the other taxpayer
does not actually claim your exemption.
Married persons.
If you file a joint return, you can take your own exemption. If you file a separate return, you can take your own
exemption only if another
taxpayer is not entitled to claim you as a dependent.
Your spouse is never considered your dependent. You may be able to take one exemption for your spouse only because you are
married.
Joint return.
On a joint return you can claim one exemption for yourself and one for your spouse.
Separate return.
If you file a separate return, you can claim the exemption for your spouse only if your spouse had no gross income,
is not filing a return, and was
not the dependent of another taxpayer. This is true even if the other taxpayer does not actually claim your spouse's exemption.
This is also true if
your spouse is a nonresident alien.
Death of spouse.
If your spouse died during the year, you generally can claim your spouse's exemption under the rules just explained
under Joint return
and Separate return.
If you remarried during the year, you cannot take an exemption for your deceased spouse.
If you are a surviving spouse without gross income and you remarry in the year your spouse died, you can be claimed
as an exemption on both the
final separate return of your deceased spouse and the separate return of your new spouse for that year. If you file a joint
return with your new
spouse, you can be claimed as an exemption only on that return.
Divorced or separated spouse.
If you obtained a final decree of divorce or separate maintenance by the end of the year, you cannot take your former
spouse's exemption. This rule
applies even if you provided all of your former spouse's support.
Exemptions for Dependents
You are allowed one exemption for each person you can claim as a dependent.
To claim the exemption for a dependent, you must meet all five of the dependency tests, discussed later. You can claim an
exemption for your
dependent even if your dependent files a return.
If you are entitled to claim an exemption for your dependent, that dependent cannot claim his or her own personal exemption.
Kidnapped child.
You may be eligible to claim the exemption for a child even if the child has been kidnapped. For more information,
see Publication 501.
Child born alive.
If your child was born alive during the year, and the dependency tests are met, you can claim the exemption. This
is true even if the child lived
only for a moment. State or local law must treat the child as having been born alive. There must be proof of a live birth
shown by an official
document, such as a birth certificate.
Stillborn child.
You cannot claim an exemption for a stillborn child.
Death of dependent.
If your dependent died during the year and otherwise met the dependency tests, you can claim the exemption for your
dependent.
Example.
Your dependent mother died on January 15. The five dependency tests are met. You can claim the exemption for her on your return.
Housekeepers, maids, or servants.
If these people work for you, you cannot claim exemptions for them.
Child tax credit.
You may be entitled to a child tax credit for each of your qualifying children for whom you can claim an exemption.
For more information, see
chapter 36.
The following five tests must be met for you to claim an exemption for a dependent.
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Member of Household or Relationship Test.
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Citizen or Resident Test.
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Joint Return Test.
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Gross Income Test.
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Support Test.
Member of Household or Relationship Test
To meet this test, a person must either:
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Live with you for the entire year as a member of your household, or
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Be related to you in one of the ways listed later under Relatives who do not have to live with you.
If at any time during the year the person was your spouse, that person cannot be your dependent. However, see Personal Exemptions,
earlier.
Temporary absences.
A person lives with you as a member of your household even if either (or both) of you are temporarily absent due to
special circumstances.
Temporary absences due to special circumstances include absences because of illness, education, business, vacation, or military
service.
If the person is placed in a nursing home for an indefinite period of time to receive constant medical care, the absence
is considered temporary.
Death or birth.
A person who died during the year, but was a member of your household until death, will meet the member of household
test. The same is true for a
child who was born during the year and was a member of your household for the rest of the year. The test is also met if a
child would have been a
member except for any required hospital stay following birth.
Local law violated.
A person does not meet the member of household test if at any time during your tax year the relationship between you
and that person violates local
law.
Relatives who do not have to live with you.
A person related to you in any of the following ways does not have to live with you for the entire year as a member
of your household to meet this
test.
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Your child, grandchild, great grandchild, etc. (A legally adopted child is considered your child.)
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Your stepchild.
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Your brother, sister, half brother, half sister, stepbrother, or stepsister.
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Your parent, grandparent, or other direct ancestor, but not foster parent.
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Your stepfather or stepmother.
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A brother or sister of your father or mother.
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A son or daughter of your brother or sister.
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Your father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law.
Any of these relationships that were established by marriage are not ended by death or divorce.
Adoption.
Even if your adoption of a child is not yet final, the child is considered to be your child if he or she was placed
with you for legal adoption by
an authorized placement agency. The child also must be a member of your household, but does not have to be a member of your
household for the entire
year.
If the child was not placed with you by an authorized placement agency, the child will meet this test only if he or
she was a member of your
household for your entire tax year.
Authorized placement agency.
An authorized placement agency includes any person or court authorized by state law to place children for legal adoption.
Foster child.
A foster child must live with you as a member of your household for the entire year to qualify as your dependent.
For this test, a foster child is
one who is in your care that you care for as your own child. It does not matter how the child became a member of the household.
Cousin.
You can claim an exemption for your cousin only if he or she lives with you as a member of your household for the
entire year. A cousin is a
descendant of a brother or sister of your father or mother.
Joint return.
If you file a joint return, you do not need to show that a person is related to both you and your spouse. You also
do not need to show that a
person is related to the spouse who provides support.
For example, your spouse's uncle who receives more than half his support from you may be your dependent, even though
he does not live with you.
However, if you and your spouse file separate returns, your spouse's uncle can be your dependent only if he is a member of
your household and lives
with you for your entire tax year.
You cannot claim an exemption for a dependent unless that person is a U.S. citizen or resident, or a resident of Canada or
Mexico, for some part of
the calendar year in which your tax year begins. However, there is an exception for certain adopted children, as explained
next.
Children's place of residence.
Children usually are citizens or residents of the country of their parents.
If you were a U.S. citizen when your child was born, the child may be a U.S. citizen although the other parent was
a nonresident alien and the
child was born in a foreign country. If so, and the other dependency tests are met, you can take the exemption. It does not
matter if the child lives
abroad with the nonresident alien parent.
Adopted child.
If you are a U.S. citizen who has legally adopted a child who is not a U.S. citizen or resident, and the other dependency
tests are met, you can
take the exemption if your home is the child's main home and the child is a member of your household for your entire tax year.
Foreign students' place of residence.
Foreign students brought to this country under a qualified international education exchange program and placed in
American homes for a temporary
period generally are not U.S. residents and do not meet the citizen or resident test. You cannot claim exemptions for them.
However, if you provided a
home for a foreign student, you may be able to take a charitable contribution deduction. See Expenses Paid for Student Living With You in
chapter 26.
Even if the other dependency tests are met, you generally are not allowed an exemption for your dependent if he or she files
a joint return.
Example.
You supported your daughter for the entire year while her husband was in the Armed Forces. The couple files a joint return.
Even though all the
other tests are met, you cannot take an exemption for your daughter.
Exception.
The joint return test does not apply if a joint return is filed by the dependent and his or her spouse merely as a
claim for refund and no tax
liability would exist for either spouse on separate returns.
Example.
Your son and his wife each had less than $3,000 of wages and no unearned income. Neither is required to file a tax return.
Taxes were taken out of
their pay, so they file a joint return to get a refund. You are allowed to take exemptions for your son and daughter-in-law
if the other dependency
tests are met, even though they file a joint return.
Generally, you cannot take an exemption for a dependent if that person had gross income of $3,100 or more for 2004. This test
does not apply if the
person is your child and is either:
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Under age 19 at the end of the year, or
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A student under age 24 at the end of the year.
The exceptions for children under age 19 and students under age 24 are discussed in detail later.
If you file on a fiscal year basis, the gross income test applies to the calendar year in which your fiscal year begins.
Gross income defined.
All income in the form of money, property, and services that is not exempt from tax is gross income.
In a manufacturing, merchandising, or mining business, gross income is the total net sales minus the cost of goods
sold, plus any miscellaneous
income from the business.
Gross receipts from rental property are gross income. Do not deduct taxes, repairs, etc., to determine the gross income
from rental property.
Gross income includes a partner's share of the gross, not a share of the net, partnership income.
Gross income also includes all unemployment compensation and certain scholarship and fellowship grants. Scholarships
received by degree candidates
that are used for tuition, fees, supplies, books, and equipment required for particular courses may not be included in gross
income. For more
information about scholarships, see chapter 13.
Tax-exempt income, such as certain social security payments, is not included in gross income.
Disabled dependents.
For this gross income test, gross income does not include income received by a permanently and totally disabled individual
for services performed
at a sheltered workshop. The availability of medical care must be the main reason the individual is at the workshop. Also,
the income must come solely
from activities at the workshop that are incident to this medical care. A sheltered workshop is a school operated by certain
tax-exempt organizations,
or by a state, a U.S. possession, a political subdivision of a state or possession, the United States, or the District of
Columbia, that provides
special instruction or training designed to alleviate the disability of the individual.
Child defined.
For purposes of the gross income test, your child is your son, stepson, daughter, stepdaughter, a legally adopted
child, or a child who was placed
with you by an authorized placement agency for your legal adoption. A foster child who was a member of your household for
your entire tax year is also
considered your child.
Child under age 19.
If your child is under 19 at the end of the year, the gross income test does not apply. Your child can have any amount
of income and you still can
claim an exemption if the other dependency tests, including the support test, are met.
Example.
Marie, 18, earned $4,000. Her father provided more than half her support. Because Marie is under 19, the gross income test
does not apply. If the
other dependency tests were met, Marie's father can claim an exemption for her.
Student under age 24.
The gross income test does not apply if your child is a student who is under age 24 at the end of the calendar year.
The other dependency tests
still must be met.
Student defined.
To qualify as a student, your child must be, during some part of each of 5 calendar months during the calendar year
(not necessarily consecutive):
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A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students
in attendance,
or
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A student taking a full-time, on-farm training course given by a school described in (1) above or a state, county, or local
government.
Full-time student defined.
A full-time student is a person who is enrolled for the number of hours or courses the school considers to be full-time
attendance.
School defined.
The term “ school” includes elementary schools, junior and senior high schools, colleges, universities, and technical, trade, and mechanical
schools. It does not include on-the-job training courses, correspondence schools, and night schools.
Example.
James, 22, attends college as a full-time student. During the summer, James earned $4,000. If the other dependency tests are
met, his parents can
take the exemption for James.
Vocational high school students.
People who work on “ co-op” jobs in private industry as a part of the school's prescribed course of classroom and practical training are
considered full-time students.
Night school.
Your child is not a full-time student while attending school only at night. However, full-time attendance at a school
can include some attendance
at night as part of a full-time course of study.
Generally, you must provide more than half of a person's total support during the calendar year to meet the support test.
However, there are
special rules that apply in the following two situations.
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Two or more persons provide support, but no one person provides more than half of a person's total support. See Multiple Support
Agreement, later.
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The person supported is the child of divorced or separated parents. See Support Test for Child of Divorced or Separated Parents,
later.
How to determine if test is met.
You figure whether you have provided more than half of a person's total support by comparing the amount you contributed
to that person's support
with the entire amount of support that person received from all sources. This includes support the person provided from his
or her own funds.
You may find Table 3-1
Table 3-1. Worksheet for Determining Support Keep for your Records
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Funds Belonging to the Person You Supported
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1.
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Enter the total funds belonging to the person you supported, including income
received (taxable and nontaxable) and amounts borrowed during the year, plus the amount in savings and other accounts at the
beginning of the
year
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1.
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2.
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Enter the amount on line 1 that was used for the person's support
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2.
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3.
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Enter the amount on line 1 that was used for other purposes
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3.
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4.
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Enter the total amount in the person's savings and other accounts at the end of the
year
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4.
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5.
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Add lines 2 through 4. (This amount should equal line 1.)
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5.
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| Expenses for Entire Household (where the person you supported lived)
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6.
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Lodging (complete line 6a or 6b):
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6a. Enter the amount of rent paid
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6a.
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6b. Enter the fair rental value of home. If the person you supported owned
the home, also include this amount in line 20.
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6b.
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7.
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Enter the total food expenses
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7.
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8.
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Enter the total amount of utilities (heat, light, water, etc. not included in line 6a
or 6b)
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8.
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9.
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Enter the total amount of repairs (not included in line 6a or 6b)
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9.
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10.
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Enter the total of other expenses. Do not include expenses of maintaining the home,
such as mortgage interest, real estate taxes, and insurance.
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10.
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11.
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Add lines 6 through 10. These are the total household expenses
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11.
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12.
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Enter total number of persons who lived in the household
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12.
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Expenses for the Person You Supported
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13.
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Divide line 11 by line 12. This is the person's share of the household
expenses
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13.
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14.
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Enter the person's total clothing expenses
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14.
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15.
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Enter the person's total education expenses
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15.
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16.
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Enter the person's total medical and dental expenses not paid for or
reimbursed by insurance
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16.
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17.
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Enter the person's total travel and recreation expenses
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17.
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18.
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Enter the total of the other person's other expenses
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18.
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19.
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Add lines 14 through 18. This is the total cost of the person's support for
the year
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19.
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Did You Provide More Than Half?
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20.
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Enter the amount from line 2, plus the amount from line 6b if the person
you supported owned the home. This is the amount the person provided for his or her own support
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20.
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21.
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Enter the amount others provided for the person's support. Include amounts
provided by state, local, and other welfare societies or agencies. Do not include any amounts included on line 1.
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21.
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22.
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Add lines 20 and 21
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22.
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23.
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Subtract line 22 from line 19. This is the amount you provided for the
person's support
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23.
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24.
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Multiply line 19 by 50% (.50)
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24.
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Yes.
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You meet the support test for the person. If the other
dependency tests are met, you can claim an exemption for the person.
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No.
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You do not meet the support test for the person. You
cannot claim an exemption for the person unless you can do so under a multiple support agreement. See Multiple Support Agreement later in
this chapter.
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helpful in figuring whether you provided more than half of a person's
support.
Person's own funds not used for support.
A person's own funds are not support unless they are actually spent for support.
Example.
Your mother received $2,400 in social security benefits and $300 in interest. She paid $2,000 for lodging and $400 for recreation.
She put $300 in
a savings account.
Even though your mother received a total of $2,700, she spent only $2,400 for her own support. If you spent more than $2,400
for her support and no
other support was received, you have provided more than half of her support.
Child's wages used for own support.
You cannot include in your contribution to your child's support any support that is paid for by the child with the
child's own wages, even if you
paid the wages.
Year support is provided.
The year you provide the support is the year you pay for it, even if you do so with borrowed money that you repay
in a later year.
If you use a fiscal year to report your income, you must provide more than half of the dependent's support for the
calendar year in which your
fiscal year begins.
Armed Forces dependency allotments.
The part of the allotment contributed by the government and the part taken out of your military pay are both considered
provided by you in figuring
whether you provide more than half of the support. If your allotment is used to support persons other than those you name,
you can take the exemptions
for them if they otherwise qualify.
Example.
You are in the Armed Forces. You authorize an allotment for your widowed mother that she uses to support herself and your
sister. If the allotment
provides more than half of their support, you can take an exemption for each of them, if they otherwise qualify, even though
you authorize the
allotment only for your mother.
Tax-exempt military quarters allowances.
These allowances are treated the same way as dependency allotments in figuring support. The allotment of pay and the
tax-exempt basic allowance for
quarters are both considered as provided by you for support.
Tax-exempt income.
In figuring a person's total support, include tax-exempt income, savings, and borrowed amounts used to support that
person. Tax-exempt income
includes certain social security benefits, welfare benefits, nontaxable life insurance proceeds, Armed Forces family allotments,
nontaxable pensions,
and tax-exempt interest.
Example 1.
You provide $4,000 toward your mother's support during the year. She has earned income of $600, nontaxable social security
benefit payments of
$4,800, and tax-exempt interest of $200. She uses all these for her support. You cannot claim an exemption for your mother
because the $4,000 you
provide is not more than half of her total support of $9,600.
Example 2.
Your daughter takes out a student loan of $2,500 and uses it to pay her college tuition. She is personally responsible for
the loan. You provide
$2,000 toward her total support. You cannot claim an exemption for your daughter because you provide less than half of her
support.
Social security benefit payments.
If a husband and wife each receive payments that are paid by one check made out to both of them, half of the total
paid is considered to be for the
support of each spouse, unless they can show otherwise.
If a child receives social security benefits and uses them toward his or her own support, the payments are considered
as provided by the child.
Support provided by the state (food stamps, housing, etc.).
Benefits provided by the state to a needy person generally are considered support provided by the state. However,
payments based on the needs of
the recipient will not be considered as used entirely for that person's support if it is shown that part of the payments were
not used for that
purpose.
Foster care payments and expenses.
Payments you receive for the support of a foster child from a child placement agency are considered support provided
by the agency. Similarly,
payments you receive for the support of a foster child from a state or county are considered support provided by the state
or county.
If you are not in the trade or business of providing foster care and your unreimbursed out-of-pocket expenses in caring
for a foster child were
mainly to benefit an organization qualified to receive deductible charitable contributions, the expenses are deductible as
charitable contributions,
but are not considered support you provided. For more information about the deduction for charitable contributions, see chapter
26. If your
unreimbursed expenses are not deductible as charitable contributions, they are considered support you provided.
If you are in the trade or business of providing foster care, your unreimbursed expenses are not considered support
provided by you.
Home for the aged.
If you make a lump-sum advance payment to a home for the aged to take care of your relative for life and the payment
is based on that person's life
expectancy, the amount of support you provide each year is the lump-sum payment divided by the relative's life expectancy.
The amount of support you
provide also includes any other amounts that you provided during the year.
To figure if you provided more than half of a person's support, you must first determine the total support provided for that
person. Total support
includes amounts spent to provide food, lodging, clothing, education, medical and dental care, recreation, transportation,
and similar necessities.
Generally, the amount of an item of support is the amount of the expense incurred in providing that item. For lodging, the
amount of support is the
fair rental value of the lodging.
Expenses that are not directly related to any one member of a household, such as the cost of food for the household, must
be divided among the
members of the household.
Example.
Your parents live with you, your spouse, and your two children in a house you own. The fair rental value of your parents'
share of lodging is
$2,000 a year, which includes furnishings and utilities. Your father receives a nontaxable pension of $4,200, which he spends
equally between your
mother and himself for items of support such as clothing, transportation, and recreation. Your total food expense for the
household is $6,000. Your
heat and utility bills amount to $1,200. Your mother has hospital and medical expenses of $600, which you pay during the year.
Figure your parents'
total support as follows:
You must apply the support test separately to each parent. You provide $2,000 ($1,000 lodging, $1,000 food) of your father's
total support of
$4,100 — less than half. You provide $2,600 to your mother ($1,000 lodging, $1,000 food, $600 medical) — more than half of
her total
support of $4,700. You meet the support test for your mother, but not your father. Heat and utility costs are included in
the fair rental value of the
lodging, so these are not considered separately.
Lodging defined.
If you provide a person with lodging, you are considered to provide support equal to the fair rental value of the
room, apartment, house, or other
shelter in which the person lives. Fair rental value includes a reasonable allowance for the use of furniture and appliances
and for heat and other
utilities that are provided.
Fair rental value defined.
This is the amount you could reasonably expect to receive from a stranger for the same kind of lodging. It is used
instead of actual expenses, such
as rent, taxes, interest, depreciation, paint, insurance, utilities, cost of furniture and appliances, etc. In some cases,
fair rental value may be
equal to the rent paid.
If you provide the total lodging, the amount of support you provide is the fair rental value of the room the person
uses, or a share of the fair
rental value of the entire dwelling if the person has use of your entire home. If you do not provide the total lodging, the
total fair rental value
must be divided depending on how much of the total lodging you provide. If you provide only a part and the person supplies
the rest, the fair rental
value must be divided between both of you according to the amount each provides.
Example.
Your parents live rent free in a house you own. It has a fair rental value of $5,400 a year furnished, which includes a fair
rental value of $3,600
for the house and $1,800 for the furniture. This does not include heat and utilities. The house is completely furnished with
furniture belonging to
your parents. You pay $600 for their utility bills. Utilities are not usually included in rent for houses in the area where
your parents live.
Therefore, you consider the total fair rental value of the lodging to be $6,000 ($3,600 fair rental value of the unfurnished
house, $1,800 allowance
for the furnishings provided by your parents, and $600 cost of utilities) of which you are considered to provide $4,200 ($3,600
+ $600).
Person living in his or her own home.
The total fair rental value of a person's home that he or she owns is considered support contributed by that person.
Living with someone rent free.
If you live with a person rent free in his or her home, you must reduce the amount you provide for support by the
fair rental value of lodging he
or she provides you.
Property.
Property provided as support is measured by its fair market value. Fair market value is the price that property would
sell for on the open market.
It is the price that would be agreed upon between a willing buyer and a willing seller, with neither being required to act,
and both having reasonable
knowledge of the relevant facts.
Capital expenses.
Capital items, such as furniture, appliances, and cars, that are bought for a person during the year can be included
in total support under certain
circumstances.
The following examples show when a capital item is or is not support.
Example 1.
You buy a $200 power lawn mower for your 13-year-old child. The child is given the duty of keeping the lawn trimmed. Because
a lawn mower is
ordinarily an item you buy for personal and family reasons that benefits all members of the household, you cannot include
the cost of the lawn mower
in the support of your child.
Example 2.
You buy a $150 television set as a birthday present for your 12-year-old child. The television set is placed in your child's
bedroom. You can
include the cost of the television set in the support of your child.
Example 3.
You pay $5,000 for a car and register it in your name. You and your 17-year-old daughter use the car equally. Because you
own the car and do not
give it to your daughter but merely let her use it, you cannot include the cost of the car in your daughter's total support.
However, you can include
in your daughter's support your out-of-pocket expenses of operating the car for her benefit.
Example 4.
Your 17-year-old son, using personal funds, buys a car for $4,500. You provide all the rest of your son's support — $4,000.
Since the car is
bought and owned by your son, the car's fair market value ($4,500) must be included in his support. The $4,000 support you
provide is less than half
of his total support of $8,500. You cannot claim an exemption for your son.
Medical insurance premiums.
Medical insurance premiums you pay, including premiums for supplementary Medicare coverage, are included in the support
you provide.
Medical insurance benefits.
Medical insurance benefits, including basic and supplementary Medicare benefits, are not part of support.
Tuition payments and allowances under the GI Bill.
Amounts veterans receive under the GI Bill for tuition payments and allowances while they attend school are included
in total support.
Example.
During the year, your son receives $2,200 from the government under the GI Bill. He uses this amount for his education. You
provide the rest of his
support — $2,000. Because GI benefits are included in total support, your son is not your dependent.
Child care expenses.
If you pay someone to provide child care or disabled dependent care, you can include these payments in the amount
you provided for the support of
your child or disabled dependent, even if you claim a credit for the payments. For information on the credit, see chapter
34.
Other support items.
Other items may be considered as support depending on the facts in each case.
Do Not Include in Total Support
The following items are not included in total support.
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Federal, state, and local income taxes paid by persons from their own income.
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Social security and Medicare taxes paid by persons from their own income.
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Life insurance premiums.
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Funeral expenses.
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Scholarships received by your child if your child is a full-time student.
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Survivors' and Dependents' Educational Assistance payments used for support of the child who receives them.
Table 3-1. Worksheet for Determining Support Keep for your Records
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Funds Belonging to the Person You Supported
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1.
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Enter the total funds belonging to the person you supported, including income
received (taxable and nontaxable) and amounts borrowed during the year, plus the amount in savings and other accounts at the
beginning of the
year
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1.
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2.
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Enter the amount on line 1 that was used for the person's support
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2.
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3.
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Enter the amount on line 1 that was used for other purposes
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3.
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4.
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Enter the total amount in the person's savings and other accounts at the end of the
year
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4.
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5.
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Add lines 2 through 4. (This amount should equal line 1.)
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5.
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| Expenses for Entire Household (where the person you supported lived)
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6.
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Lodging (complete line 6a or 6b):
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6a. Enter the amount of rent paid
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6a.
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6b. Enter the fair rental value of home. If the person you supported owned
the home, also include this amount in line 20.
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6b.
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7.
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Enter the total food expenses
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7.
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8.
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Enter the total amount of utilities (heat, light, water, etc. not included in line 6a
or 6b)
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8.
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9.
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Enter the total amount of repairs (not included in line 6a or 6b)
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9.
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10.
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Enter the total of other expenses. Do not include expenses of maintaining the home,
such as mortgage interest, real estate taxes, and insurance.
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10.
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11.
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Add lines 6 through 10. These are the total household expenses
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11.
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12.
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Enter total number of persons who lived in the household
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12.
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Expenses for the Person You Supported
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13.
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Divide line 11 by line 12. This is the person's share of the household
expenses
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13.
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14.
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Enter the person's total clothing expenses
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14.
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15.
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Enter the person's total education expenses
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15.
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16.
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Enter the person's total medical and dental expenses not paid for or
reimbursed by insurance
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16.
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17.
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Enter the person's total travel and recreation expenses
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17.
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18.
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Enter the total of the other person's other expenses
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18.
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19.
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Add lines 14 through 18. This is the total cost of the person's support for
the year
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19.
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Did You Provide More Than Half?
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20.
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Enter the amount from line 2, plus the amount from line 6b if the person
you supported owned the home. This is the amount the person provided for his or her own support
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20.
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21.
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Enter the amount others provided for the person's support. Include amounts
provided by state, local, and other welfare societies or agencies. Do not include any amounts included on line 1.
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21.
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22.
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Add lines 20 and 21
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22.
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23.
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Subtract line 22 from line 19. This is the amount you provided for the
person's support
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23.
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24.
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Multiply line 19 by 50% (.50)
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24.
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| Is line 23 more than line 24? |
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Yes.
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You meet the support test for the person. If the other
dependency tests are met, you can claim an exemption for the person.
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No.
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You do not meet the support test for the person. You
cannot claim an exemption for the person unless you can do so under a multiple support agreement. See Multiple Support Agreement later in
this chapter.
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Multiple Support Agreement
Sometimes no one provides more than half of the support of a person. Instead, two or more persons, each of whom would be able
to take the exemption
but for the support test, together provide more than half of the person's support.
When this happens, you can agree that any one of you who individually provides more than 10% of the person's support, but
only one, can claim an
exemption for that person. Each of the others must sign a statement agreeing not to claim the exemption for that year. The
person who claims the
exemption must keep these signed statements for his or her records. A multiple support declaration identifying each of the
others who agreed not to
claim the exemption must be attached to the return of the person claiming the exemption. Form 2120, Multiple Support Declaration,
can be used for this
purpose.
Example 1.
You, your sister, and your two brothers provide the entire support of your mother for the year. You provide 45%, your sister
35%, and your two
brothers each provide 10%. Either you or your sister can claim an exemption for your mother. The other must sign a statement
agreeing not to take an
exemption for your mother. The one who claims the exemption must attach a Form 2120 or similar declaration to his or her return
and must keep the
statement signed by the other for his or her records. Because neither brother provides more than 10% of the support, neither
can take the exemption
and neither has to sign a statement.
Example 2.
You and your brother each provide 20% of your mother's support for the year. The remaining 60% of her support is provided
equally by two persons
who are not related to her. She does not live with them. Because more than half of her support is provided by persons who
cannot claim an exemption
for her, no one can take the exemption.
Example 3.
Your father lives with you and receives 25% of his support from social security, 40% from you, 24% from his brother, and 11%
from a friend. Either
you or your uncle can take the exemption for your father if the other signs a statement agreeing not to. The one who takes
the exemption must attach a
Form 2120 or a similar declaration to his return and must keep for his records the signed statement from the one agreeing
not to take the exemption.
Support Test for Child of Divorced or Separated Parents
The support test for a child of divorced or separated parents is based on the special rules explained here and shown in Figure 3-B.
However, these special rules apply only if all of the following are true.
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The parents are divorced or legally separated under a decree of divorce or separate maintenance, or separated under a written
separation
agreement, or lived apart at all times during the last 6 months of the calendar year.
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One or both parents provide more than half of the child's total support for the calendar year.
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One or both parents have custody of the child for more than half of the calendar year.
“Child” is defined earlier under Gross Income Test.
This discussion does not apply if the support of the child is determined under a multiple support agreement, discussed earlier.
General rule.
The parent who has custody of the child for the greater part of the year (the custodial parent) is generally treated
as the parent who provides
more than half of the child's support. It does not matter whether the custodial parent actually provided more than half of
the support.
Custody.
Custody is usually determined by the terms of the most recent decree of divorce or separate maintenance, or a later
custody decree. If there is no
decree, use the written separation agreement. If neither a decree nor agreement establishes custody, then the parent who has
the physical custody of
the child for the greater part of the year is considered to have custody of the child. This also applies if the validity of
a decree or agreement
awarding custody is uncertain because of legal proceedings pending on the last day of the calendar year.
If the parents are divorced or separated during the year and had joint custody of the child before the separation,
the parent who has custody for
the greater part of the rest of the year is considered to have custody of the child for the tax year.
Example 1.
Under the terms of your divorce, you have custody of your child for 10 months of the year. Your former spouse has custody
for the other 2 months.
You and your former spouse provide the child's total support. You are considered to have provided more than half of the support
of the child. However,
see Exception, later.
Example 2.
You and your former spouse provided your child's total support for 2004. For the first 8 months of the year, you had custody
of your child under
your 1996 divorce decree (the most recent decree at the time). On August 31, 2004, a new custody decree granted custody to
your former spouse. Because
you had custody for the greater part of the year, you are considered to have provided more than half of your child's support,
unless the exception
described next applies.
Exception.
The noncustodial parent will be treated as providing more than half of the child's support if:
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The custodial parent signs a written declaration that he or she will not claim the exemption for the child, and the noncustodial
parent
attaches this written declaration to his or her return,
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The custodial parent signed a decree or agreement executed after 1984 stating he or she will not claim the exemption for the
child and that
the noncustodial parent can claim an exemption for the child without regard to any condition, such as payment of support,
and the noncustodial parent
attaches to his or her return the documentation described later under Divorce decree or separation agreement made after 1984, or
-
A decree or agreement executed before 1985 provides that the noncustodial parent is entitled to the exemption, and he or she
provides at
least $600 for the child's support during the year, unless the pre-1985 decree or agreement is modified after 1984 to specify
that this provision will
not apply.
Noncustodial parent.
The noncustodial parent is the parent who has custody of the child for the shorter part of the year or who does not
have custody at all.
Written declaration.
The custodial parent may use either Form 8332 or a
similar statement (containing the same information required by the form) to make the written declaration to release the exemption
to the noncustodial
parent. The noncustodial parent must attach the form or statement to his or her tax return.
The exemption can be released for a single year, for a number of specified years (for example, alternate years), or
for all future years, as
specified in the declaration. If the exemption is released for more than one year, the original release must be attached to
the return of the
noncustodial parent for the first year, and a copy must be attached for each later year.
Divorce decree or separation agreement made after 1984.
If your divorce decree or separation agreement was
executed after 1984, the noncustodial parent does not have to attach Form 8332 if both of the following requirements are met.
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The decree or agreement is signed by the custodial parent and states all of the following.
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The custodial parent will not claim the child as a dependent for the year.
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The noncustodial parent can claim the child as a dependent without regard to any condition, such as payment of support.
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The years for which the noncustodial parent, rather than the custodial parent, can claim the child as a dependent.
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The noncustodial parent attaches a copy of the following pages of the decree or agreement to his or her tax return.
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The cover page (write the other parent's social security number on this page).
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The pages that contain the information shown in item (1).
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The signature page with the other parent's signature and the date of the agreement.
If these requirements are not met, the noncustodial parent must attach to his or her return Form 8332 or a similar statement
from the custodial
parent releasing the exemption.
Child support.
All child support payments actually received from the noncustodial parent are considered used for the support of the
child.
Example.
The noncustodial parent provides $1,200 for the child's support. This amount is considered support provided by the noncustodial
parent even if the
$1,200 was actually spent on things other than support.
Paid in a later year.
If you fail to pay child support in the year it is due, but pay it in a later year, your payment of the overdue amount
is not considered paid for
the support of your child, either for the year the payment was due or for the year it is paid. It is payment of an amount
you owed to the custodial
parent, but it is not considered paid by you for the support of your child.
Example.
You owed but failed to pay child support last year. This year, you pay all of the amount owed from last year and the full
amount due for this year.
Your payment of this year's child support counts as your support for this year, but your payment of the amount owed from last
year does not count as
support either for this year or for last year.
Third-party support.
Support provided by a third party for a divorced or separated parent is not included as support provided by that parent.
However, see
Remarried parent, later.
Example.
You are divorced. During the entire year, you and your child live with your mother in a house she owns. The fair rental value
of the lodging
provided by your mother for your child is $3,000. The home provided by your mother is not included in the amount of support
you provide.
Remarried parent.
If you remarry, the support provided by your new spouse is treated as provided by you.
Example.
You have two children from a former marriage who live with you. You have remarried and are living in a home owned by your
new spouse. The fair
rental value of the home provided to the children by your new spouse is treated as provided by you.
Home jointly owned.
If you and your former spouse have the right to use and live in the home, each of you is considered to provide half
of your child's lodging.
However, if the divorce decree gives only you the right to use and live in the home, you are considered to provide your child's
entire lodging. It
does not matter if the legal title to the home remains in the names of both parents.
Parents who never married.
These special rules for divorced or separated parents also apply to parents who never married.
The amount you can claim as a deduction for exemptions is phased out once your adjusted gross income (AGI) goes above a certain
level for your
filing status. These levels are as follows:
If your AGI exceeds the level for your filing status, use the Deduction for Exemptions Worksheet in the instructions for Form 1040 to
figure the amount of your deduction for exemptions.
You must reduce the dollar amount of your exemptions by 2% for each $2,500, or part of $2,500 ($1,250 if you are married filing
separately), that
your AGI exceeds the amount shown above for your filing status. If your AGI exceeds the amount shown by more than $122,500
($61,250 if married filing
separately), the amount of your deduction for exemptions is reduced to zero.
Social Security Numbers for Dependents
You must list the social security number (SSN) of any person for whom you claim an exemption in column (2) of line 6c of your
Form 1040 or Form
1040A.
If you do not list the dependent's SSN when required or if you list an incorrect SSN, the exemption may be disallowed.
No SSN.
If a person for whom you expect to claim an exemption on your return does not have an
SSN, either you or that person should apply for an SSN as soon as possible by filing Form SS-5, Application for a Social Security
Card, with the
Social Security Administration (SSA). Information about applying for an SSN and Form SS-5 is available at your local SSA office.
It usually takes about 2 weeks to get an SSN. If you do not have a required SSN by
the filing due date, you can file Form 4868 for an extension of time to file.
Born and died in 2004.
If your child was born and died in 2004, and you do not have an SSN for the child, you
may attach a copy of the child's birth certificate instead. If you do, enter “ DIED” in column (2) of line 6c of your Form 1040 or Form 1040A.
Alien or adoptee with no SSN.
If your dependent does not have and cannot get an SSN, you must list the individual taxpayer identification number
(ITIN) or adoption taxpayer
identification number (ATIN) instead of an SSN.
Taxpayer identification numbers for aliens.
If your dependent is a resident or nonresident alien who does not have and is not eligible to get an SSN, your dependent
must apply for an
individual taxpayer identification number (ITIN). Write the number in column (2) of line 6c of your Form 1040 or Form 1040A.
To apply for an ITIN, use
Form W-7, Application for IRS Individual Taxpayer Identification Number.
Taxpayer identification numbers for adoptees.
If you have a child who was placed with you by an authorized placement agency, you may be able to claim an exemption
for the child. However, if you
cannot get an SSN or an ITIN for the child, you must get an adoption taxpayer identification number (ATIN) for the child from
the IRS. See Form W-7A,
Application for Taxpayer Identification Number for Pending U.S. Adoptions, for details.
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