Tax Dependents That Necessitate The Filing Of An Additional Tax Form
Most individuals know ahead of time how many tax dependents they will claim on their tax return. However, some tax filers provide some degree of financial support for another person who is not claimed as a dependent. In certain situations, tax filers may file an additional form and claim a dependent who would otherwise not be included on the tax return.
Siblings in a family may provide support for an aging parent, although no one sibling provides over half of the parent's total support. A divorced person may provide support for a child living with a former spouse, although the child qualifies as the dependent of the former spouse. In either case, the interested parties may reach a mutual agreement concerning who will claim the supported individual.
Parent supported by adult children
If two or more siblings collectively provide over half the total support for a parent, one of the siblings may be able to claim the parent as a dependent. To do so, a mutual decision must be reached between all siblings who respectively provide more than 10 percent of the parent's support. If the other siblings waive their rights to claim your parent, you may add the parent as a dependent on your own tax return.
The mutual decision between siblings is referred to as a multiple support agreement. IRS Form 2120 is used to claim a dependent by virtue of a multiple support agreement. Form 2120 is valid for only one calendar year, so you may designate a different sibling to claim your parent from year to year.
Child supported by noncustodial parent
A child generally must reside with a tax filer for over half the year to be claimed as a dependent. For that reason, a child of divorced parents is usually a dependent of the custodial parent. However, there is a tax form that allows the custodial parent to release certain tax benefits of a dependent to the noncustodial parent.
IRS Form 8332 releases the dependency exemption to the noncustodial parent. An exemption is the amount by which taxable income is reduced for each dependent. Gaining the exemption also makes you eligible to claim the child tax credit. Form 8332 allows the custodial parent to release the exemption for just one year or for multiple years.
A bit of planning is necessary to claim a dependent through the use of an additional tax form. To obtain the necessary signatures, all of the interested parties must be in agreement. Contact an accountant for more advice on how to complete Form 2120 or Form 8332 ahead of your tax preparation.
For more information, contact local professionals like those found at Alexander & Associates CPA.