- quote -

Wrong. There are regs which contradict this train of
thought. Can't recall them right off hand, but will get back
to you. Be careful on those blanket statements.

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- quote -

Unless you meet all the support tests AND their income is
below whatever the code says, say about $6000 (I don't
recall) then you cannot claim them.

Plus it appears you cannot claim the mortgage interest as
posted.

Whose name is no the dee? if its not you name then you
cannot even claim the RE taxes!

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First, since the mortgage is in their names, you can't claim
it even if you pay it. You're not legally obligated to do
so.

Dependents? If a dependent (other than your own child under
age 24) makes GROSS income of $3,050 (the amount you deduct
for a dependent this year) you can't claim them. Gross
income includes rental income, pensions, interest, but NOT
Social Security in their circumstance. (They don't make
enough to make it taxable.)

Nan, EA in LA

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tomcNO[at]SPAMfastnetit.com posted:

- quote -

Well, not exactly.

You must contribute "more than half" of the funds needed for
their support. So "a portion of their housing cost" won't
cut it for the IRS.

There's a worksheet around (we used it during our training
this year) which is something like a net worth statement,
where you show your parents' assets, including savings
balances, taxable and untaxable income for the year, etc. --
at the beginning of the year.

Then, the amount *they* used to pay for their own support,
the amount for other purposes (savings, etc.), then the
amount in savings and other accounts at the end of the year.
The total of "Support spending" + "Other uses" + amount at
end of year should equal the starting balance on the first
line.

Then, you calculate the expenses of the household where the
"potential dependent" (your parents, in this case) lived --
and you could compute a "fair rental value" for their "home"
in this case; then food, then utilities, then other housing
expenditures -- repairs, real estate taxes, mortgage
interest, insurance; all of which should generate a _total
household expense for your (and their) home.

Then, you should divide that total with the number of
persons who lived in the household. That would be 7, IMO
(Yourself, your wife, your 3 children, and two parents).

Then you divide the total cost of maintaining that household
by the number of occupants (7), and that will generate a net
cost per person. You could then multiply that by two, which
would give you the cost of housing for your parents.

To that, you would add their clothing costs, medical and
dental expense, travel, recreation and any other expenses.
That would give you the full cost of support for your two
parents.

You must then verify that you provided *more than half* of
that cost. That means at least $1 more than 50%.

If you've done your "homework" as outlined, and it shows you
paid more than half of the costs to support your parents
.....

Then, you can include them as dependents.

It may seem like a lot of work, but it's an exercise which
will be necessary should the IRS ever raise a question.
And, since you note the "mortgage is in their names (long
story)," don't forget that public records will show they own
the home -- which means that would be one of their assets in
the "net worth statement" which you prepare to _verify you
provided more than half of their support. [Of course, it
will weigh in as a beginning and ending balance factor.]

One encouraging note: If you've done this exercise right,
it will be incredibly easy to update it each year, so you'll
always have a solid verification for your claim of
dependency every year in the future.

Hope this helps.

Bill

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"Tom C." <tomcNO[at]SPAMfastnetit.com> wrote:

- quote -

That's normal? Maybe in California. Since your parents own
the home, it sounds like you are living WITH THEM, not the
other way around.

- quote -

No. Not if their individual income exceeds $3,050 each. You
can't deduct the mortgage interest or property taxes you pay
either; you are not on the mortgage (not legally liable) and
don't own the house.

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I file pretty normally here in California - jointly with
wife and three kids. My parents live with us in the same
home - mortgage is in their names (long story).

I pay the bulk of our mortgage payment - they contribute
about 30%. I pay the Property Tax as well and they pay the
Home Owners Insurance. My Dad is disabled - legally blind.
Works part-time and collects Social Security. My Mom works
part-time as well - doesn not get SS. They both don't make
enough to file taxes.

Can I claim them as Dependents since I pay for a portion of
their housing cost?

Thanks-

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