This is something I am just looking into, so curious if others have successfully accomplish this. I mentioned it in passing with my CPA, and read two articles, but that is as far as I have gotten! As I have not kept records of the expenses I have paid for this year, I would not start until 2025, which is just around the corner!
My mother currently is about $1000-$1500 short each month with her bills. She moved to an Independent Living community this past February, and her rent/fees will go up this February. At 93 she is still self sufficient, but I take her to her appointments and run her errands like groceries and such. Her car finally died last month, so we were able to drop that expense.
She still has a bit of investment/Roth left; valued around $60K plus her SS. Instead of selling what she has, I have just been putting the needed amount in her checking account as I pay her bills. Prior to her move and my husband’s death, he was giving her quit a bit of money. While I can’t do anything about that now, I would like to see if claiming her as a dependent would be worth my while. I fortunately/unfortunately have the money to help her out due to my husband’s life insurance, but I might need that for my own care as I age myself.
For those that are doing this, or maybe have looked into it, what do I need to know?
I’m kind of thinking no, because it doesn’t sound like you provide at least half her support. Here’s the IRS dependent quiz: Whom may I claim as a dependent? | Internal Revenue Service. But if you keep track of your support & end up providing at least half her support, you should be able to claim her.
I am aware I would need to provide half of her support, which I believe I will need to do next year when her rent goes up. I figured I would start keeping clear records and use a separate credit card for all her outside purchases to make record keeping cleaner.
My CPA, who happens to be a cousin by marriage, said we would talk about it more if it was something I wanted to look into. Again, this was something I just thought about; I know very little about the pros and cons of doing this.
I can’t answer the tax question. But perhaps it could make sense for her to dig into those $60k investments to cover the shortfall. Then if she ‘runs dry’, she’d need to switch to Medicaid coverage (which may or may not work in her current place).