Can You Claim Your Parents as Dependents in Texas?

by | Mar 25, 2024

Supporting your parents as they age is a common situation, and sometimes, that support extends to their finances. If you live in Texas and provide significant financial assistance, you might be eligible to claim them as dependents on your federal tax return. This can lead to tax benefits, but it’s important to understand the rules to ensure you qualify.

Tax law in the US is governed by the Internal Revenue Service (IRS) at the federal level, not by individual states. This means that regardless of your location in Texas, the criteria for claiming a dependent are the same nationwide. The IRS outlines these requirements in Publication 501.

The Qualifying Relative Test:

The IRS has five tests to determine if someone qualifies as your dependent. Here’s a closer look at the most relevant ones for claiming a parent:

  • Relationship Test: Your parent must be a qualifying relative. This includes your biological, adoptive, or stepparent, as well as a grandparent or other direct ancestor.
  • Citizenship or Residency Test: Your parent must be a U.S. citizen, resident alien, or someone who has lived in the U.S., Canada, or Mexico for the entire year.
  • Support Test: This is the most crucial factor. You generally need to provide more than half of your parent’s total support for the year. This includes all their living expenses like food, housing, utilities, medical care, and even non-essential items. There are some exceptions, such as government benefits they receive (e.g., Social Security).
  • Income Test: Your parent’s gross income for the year cannot be above a certain threshold set by the IRS. This limit is adjusted annually.

Living Situation Doesn’t Disqualify:

Your parent doesn’t have to live with you to be considered a dependent. As long as they meet the other qualifying tests, you can still claim them even if they reside in a separate home, like a nursing facility.

Multiple Support Agreements:

What if you and other siblings contribute financially to your parent’s care? The IRS allows for “multiple support agreements.” If you and others each provide more than 10% of your parent’s support, you can all agree for one person to claim the dependency. This agreement needs to be formalized in writing and signed by everyone involved.

Tax Benefits and Considerations:

Claiming a dependent can offer tax advantages, such as:

  • Increased Standard Deduction: The standard deduction you can claim on your tax return increases when you have dependents.
  • Potential Tax Credits: Depending on your situation, you might be eligible for tax credits like the Child and Dependent Care Credit (if you pay for your parent’s care while you work) or the Credit for Other Dependents.

Tax laws are subject to change, so it’s vital to consult with a tax professional to understand the specific benefits and potential tax implications for your situation. They can also help you determine if itemizing deductions might be more advantageous than the standard deduction when claiming a dependent.

Texas Specifics:

Texas doesn’t have a state income tax, so claiming a dependent on your federal return has no direct impact on your state taxes. However, claiming a dependent might affect your eligibility for certain state benefits programs. It’s always best to check with the Texas Department of Health and Human Services for any potential implications.

Claiming your parent as a dependent can be a great way to reduce your tax burden and offset some of the costs associated with their care. However, it’s important to carefully consider the IRS requirements and ensure you meet all the qualifications. Consulting with a tax professional can help you navigate the complexities of tax law and maximize your tax benefits.