Can I claim my parents as dependents on my tax return?

2018 law change: This deduction is gone, beginning with the 2018 tax year.  However, the increased standard deduction amount and the new $500 credit for non-child dependents may offset at least part of this change.  The explanation below applies to tax years before 2018.

Pre-2018 rules for claiming parent as a dependent

Under IRS code, a person deemed the head of a household can claim relatives living in that household as dependents on a tax return. This means that if you meet the requirements of being the head of household, you can claim your parents as tax dependents; but before you do so, you must pass the test set out by the IRS to determine if your parents qualify as non-child dependents. IRS regulations provide five requirements that must be met before you can claim a relative as a tax dependent.

Five Requirements for Claiming Parents as Dependents

The first main requirement is to establish that the person you seek to claim as a tax dependent is a relative. Because of the blending of households, this can become a messy issue. For example, if your natural father and his girlfriend of 20 years moved in with you, you may consider the girlfriend his common law wife and call her mom for all practical purposes. But if your state does not recognize common law marriages, then for all legal purposes, she cannot be your mom. You can still claim your dad, but you won’t be able to claim someone who is just like family as a dependent even though you treat them as such.

The second requirement is citizenship. Your parents must be citizens or residents of the United States, Canada, or Mexico. Both immigration law and tax law can be quite complicated and an overlap of both can be an audit waiting to happen. Only claim your parents if you actually know they meet the citizenship requirement. If you have any amount of uncertainty, confirm your parents' status before you claim them as dependents on your income tax.

The third requirement relates to your parents’ gross income. Their gross taxable income (e.g., capital gains, self-employment income and other taxable income) must be less than the personal exemption for the year in which you claim them. In 2016 and 2017, the limit is $4050. Gross income does not apply to the nontaxable Social Security benefits or retirement distributions.

The fourth requirement concerns who else may claim your parents as dependents. Once you claim them as dependents, your parents cannot file a joint return and cannot claim themselves as head of a household. To avoid hurt feelings or confusion, visit with your parents (and anyone else who may want to claim them) so that you do not duplicate their status as a dependent. 

The last requirement is support. You must provide more than 50% of your parent's total financial support during the year. If you share that responsibility with others (i.e., your sister and your two brothers), you must provide more than 10% of your parent's total financial support to claim an exemption for your parents (in addition to meeting the other tests). To do so, you must also obtain IRS form 2120 from each sibling/supporter who provided more than 10% of the support and who has agreed not to take the dependency exemption on their own return.

Getting Legal Help with Tax Dependent Issues

Even if your parents do not fully meet these requirements as your dependents, you might be able to still deduct medical expenses paid on their behalf. But remember, you must meet all five of the IRS guidelines described above before you can claim your parent as a dependent on your tax return. If you are not sure if you meet one or more of these tax dependence requirements, consult with an attorney who specializes in tax law who can help you avoid an unwelcome audit later.