Adding dependants to your tax return

There are 2 people you need to speak to before you claim them.

Your sister and a good Tax expert.

You could do it, by claiming head of household.

But, I would be curious as to how it would affect any type of state assistance she might qualify for, now and in the future. Hence, the tax expert.

It could turn out to be a double edged sword.

 

You have several issues here that will need to be addressed.

First, you state she is separated. There is a potential tax problem for her and her spouse. Her husband may try to file and claim the children. A separation agreement or divorce by the end of the year here. If the dependent can be claimed by another, you cannot claim them. Your sister has the right to claim them, but without the means of support it can go to you.

Member of Household or Relationship Test





To meet this test, a person must either:

1. Live with you all year as a member of your household, or
2. Be related to you in one of the ways listed 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 qualifying relative. However, see Personal Exemptions , earlier.
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 all year as a member of your household to meet this test.

• Your child, stepchild, foster child, or a descendant of any of them (for example, your grandchild). (A legally adopted child is considered your child.)
• Your brother, sister, half brother, half sister, stepbrother, or stepsister.
• Your father, mother, grandparent, or other direct ancestor, but not foster parent.
• Your stepfather or stepmother.
• A son or daughter of your brother or sister.
• A brother or sister of your father or mother.
• Your son-in-law, daughter-in-law, father-in-law, mother-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.

There are tests for claiming them under publication 17 chapter 3.
Qualifying Relative





There are four tests that must be met for a person to be your qualifying relative. The four tests are:

1. Not a qualifying child test,
2. Member of household or relationship test,
3. Gross income test, and
4. Support test.

Age. Unlike a qualifying child, a qualifying relative can be any age. There is no age test for a qualifying relative.


Issues such as these get very complex. I agree with Dance694u about getting proper tax advice.

You can pm later, a bit tired after 2 long days. Will be home for 5 days and will gladly look into a little deeper. BUT, I still advise local accountant help during the later times.

 

Issues like what you are presenting make for tough tax preparations.

Good luck.

 

If you are going to use"Head of Household"remember,you cannot be married.Like others have said,there is a test to show who is a qualifying child or relative and they must meet other protocol such as income.I believe for tax year 2007,it was under $3,300 maximum gross income.If your sister decides to seek public assistance(welfare)those benefits are not considered taxable income.Yes,a tax professional can guide you,until then you can go to the IRS website,in search,type in,501.Once there,hit on the second topic in the list.It will answer most of your questions.Also search Pennsylvania Department of Welfare on how to get your sister some public aid.Before I forget,if your sister recieves child support,she does not have to show this as taxable income,the father or payee does.I used "Head of Household" for a few years after my wife died.After my son turned 18,I still used it because his income fell under the guidelines for a qualifying relative.It does provide some tax relief.Good luck to you,your sister and kids.

 

You can file head of household if married under certain circumstances.


link http://www.irs.gov/publications/p501/ar02.html#d0e1116

Considered married. You are considered married for the whole year if on the last day of your tax year you and your spouse meet any one of the following tests.

1. You are married and living together as husband and wife.
2. You are living together in a common law marriage that is recognized in the state where you now live or in the state where the common law marriage began.
3. You are married and living apart, but not legally separated under a decree of divorce or separate maintenance.
4. You are separated under an interlocutory (not final) decree of divorce. For purposes of filing a joint return, you are not considered divorced.

 

Thanks,roadmedic I missed it.Should have known better.I'll go sit in the corner for a time out.

 

No problem. After 30 years of return preparation and having to do lengthy continuing education each year, it is something that always stays with you.