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EXEMPTION FOR OTHER DEPENDENTS
A taxpayer may claim an individual other than her spouse or
child as a
dependent only if all the following tests are met: (1) the support test,
(2) the relationship test, and (3) the citizenship test. In addition, a
gross income test and a joint return test must be met. These rules are
(a) SUPPORT TEST
A taxpayer must provide more than one-half of the support of an individual
claimed as a dependent for the calendar year in which the taxpayer's
taxable year begins. Code Section 152(a). If an individual provides more
than one-half of his own support for the taxable year, no other taxpayer
can meet the support test and, therefore, no one can claim that
individual as a dependent. If any other individual provides more than
one-half of a person's support, only that other person can meet the
support test (except in the case of certain divorced parents). Reg.
OBSERVATION: An individual becomes a "dependent" of the taxpayer
(giving rise to many tax benefits) if she qualifies under the support
test and satisfies one of the relationship status requirements set
out in Code Section 152(a)(1) through (8). For example, if a taxpayer
provides more than half of the support of elderly parents, they are
her "dependents" even though she may not be able to claim the
dependency exemption deduction because their gross income exceeds the
exemption amount, and she can nevertheless deduct any medical
expenses she pays for them, given their status as dependents,
regardless of the fact that they have gross income in excess of the
exemption amount. Code Section 213(a).
(a)(1) "Support" Defined
The support test is strictly one of costs based on the amount of financial
support provided; the period of time over which support is provided is not
taken into account. Reg. Section 1.152-1(a)(2). An individual's total
support is the amount expended for the support items used by the
individual and the pro rata share of household expenses incurred in
maintaining the household where the individual lives that can be directly
allocated to him. The fair market value of support that is furnished in
kind, such as property or lodging, is included in this determination.
Reg. Section 1.152-1(a)(2). In general, only amounts actually spent for
an individual's support are counted; amounts that are available for
support (e.g., income of a dependent), but not so used, are disregarded.
Only support furnished in the tax year is taken into account. <24> A
taxpayer who provides support with borrowed funds or otherwise incurs an
unconditional obligation to pay for support is regarded as providing
support even though he does not actually pay the obligations until a later
A taxpayer claiming an individual as her dependent can be required to
prove the amount of the dependent's support and who furnished more than
one-half of that amount. A taxpayer who furnishes all of a
dependent's support, however, need not prove the total amount.
Similarly, a taxpayer who can prove that she furnished more than one-half
of a dependent's total support for the year need not prove the precise
amount of the total support of the dependent.
OBSERVATION: There are many situations where it is necessary to
determine whether particular items constitute "support," in order to
determine which of two or more parties meets the support test, as
(a)(2) Multiple Support Agreements
If no one taxpayer provides more than one-half of the support for an
individual, any taxpayer who actually provides more than 10 percent of the
individual's support can be treated as having met the support test if a
multiple support agreement is filed. To be eligible to use a multiple
support agreement, more than one-half of the individual's support must be
received from a group of persons (including the taxpayer), each of whom
would otherwise have been entitled to claim the individual as a dependent
if the taxpayer had furnished more than one-half of the individual's
support, and no one taxpayer furnished more than one-half of that support.
The taxpayer who claims the exemption under the multiple support agreement
must have contributed more than 10 percent of the individual's total
support during the year. In addition, every individual in the group who
contributed more than 10 percent must provide to the taxpayer claiming the
exemption a written declaration that he will not claim that individual as
a dependent for that tax year. The taxpayer claiming the exemption must
attach a statement to his return that identifies the persons required to
provide a waiver declaration and that indicates that the taxpayer has
obtained waiver declarations from these persons. The taxpayer must retain
the waiver declarations. (For tax years beginning before 2002, the
taxpayer must attach the declarations received from the other individuals
to the return.) The taxpayer can also be required to furnish the names of
all contributors (whether members of the above group) and the amount
contributed by each. Reg. Section 1.152-3T(c).
COMPLIANCE TIP: The declaration is made on Form 2120, Multiple
Support Declaration, or on some other writing that conforms to Form
EXAMPLE 5: Able, Baker, Charlie, and Delta are brothers. For the
current tax year, they contributed the entire support of their mother
in the following percentages: Able, 30 percent, Baker, 20 percent,
Charlie, 29 percent, and Delta, 21 percent. Any one of the brothers
would be entitled to claim his mother as a dependent, except for the
fact that no one contributed more than one-half of her support.
Consequently, any one of the brothers could claim his mother as a
dependent under a multiple support agreement provided he has obtained
a written waiver declaration from each of the other brothers and
attached a statement that indicates he has obtained the declarations
from them to his income tax return. Even though Able and Delta
together contributed more than one-half of their mother's support,
the written declarations of all are required for any brother to claim
his mother as a dependent because each of them contributed more than
10 percent of the support, and, but for the amount of support, would
have been entitled to claim her as a dependent.
PRACTICE TIP: Assume in the above example Able, Baker, and Charlie
are in the 15 percent bracket, but that Delta's marginal tax rate is
31 percent. The $2,700 dependency deduction would have produced an
$837 tax saving for Delta, but would save the other three brothers
only $405 each. In addition, the brother who will claim the deduction
for the year under the written declaration should be sure to pay the
mother's medical expenses, since he is the only one eligible to
derive a tax benefit by paying for them.
Go to sample multiple support declaration.
(a)(3) Items of Support
Support includes food, shelter, clothing, medical and dental care,
education, and the like. Reg. Section 1.152-1(a)(2)(i). Other items may
be support depending on the facts and circumstances of each case.
Additional items that have been treated as items of support include:
(1) Recreation, including summer camp, horseback riding,
entertainment and vacation expenses, and additional club dues
attributable to the dependent's use of club facilities;
(2) medical and dental care (including premiums on accident and
health insurance) <32> and vitamins;
(3) child care expenses;
(4) allowances and gifts;
(5) toilet articles, haircuts, permanent waves, bicycles, and other
(6) charitable contributions by or for the dependent;
(7) armed forces dependency allotments and tax exempt military
(8) singing, dancing, drama, <39> and sports lessons; and
(9) expenditures made by a parent for a child's wedding.
CAUTION: It is apparent from the above list that for purposes of
determining support "necessities" encompass much more than food,
clothing, and shelter. That raises the difficult question: Under what
circumstances is a big ticket item counted as support? The IRS has
ruled that a car is counted as support, provided the child receives
title to the car. Rev. Rul. 77-282 , 1977-2 C.B. 52.
EXAMPLE 6: Betty, the Franklin's 17-year-old daughter, lives at home
and receives all of her support from her parents. She uses her
personal funds to buy her own car, a 1965 Corvair 500. The support
from her parents is valued at $4,000. The car costs $4,500. Since the
car is bought and owned by Betty, the car's fair market value
($4,500) must be included in her support, so the parents no longer
meet the support text and lose the $2,700 deduction (at a tax cost of
$837 if they are in a 31 percent tax bracket). IRS Publication 17.
However, the IRS conclusion in this Publication is questionable
because it ignores the fact that the car will be used in later years.
PRACTICE TIP: Contributing to the purchase of a car, to a trip to
Europe, or to the purchase of any other big ticket item for a child
should be considered when a person, other than the parents, purchases
a car for a child and gives it title to the car. This will avoid the
loss of the exemption if, for whatever reason the IRS questions the
Items that have not been treated as items of support include:
(1) Federal or state income taxes and social security taxes; .
(2) medical expense reimbursements for auto accident injuries;
(3) club dues, if no additional charge was imposed for the
dependent's use of the club facilities;
(4) automobile insurance, if the policy covered other cars and there
was no reliable evidence of the cost attributable to the dependent's
car or reasonable basis for estimating such cost;
(5) a boat, rifle, or lawnmower; and
(6) funeral expenses for a deceased dependent.
Support items furnished as compensation for services are not support, even
if furnished to relatives. Limpert v. Commissioner, 37 T.C. 447 (1961).
Therefore, a taxpayer is not entitled to a personal exemption for his
(a)(4) Tax-Exempt Items
In computing the total support of an individual and the amount contributed
by any person toward that support, the fact that support payments are made
from tax-exempt income or from capital or other sources is immaterial.
Tax-free support items include certain social security benefits,
welfare benefits, medical insurance premiums or benefits, armed forces
family allotments, non-taxable pensions, tax-exempt interest, and borrowed
OBSERVATION: For purposes of determining whether the gross income
test is met, these items do not count.
Social security payments to the child of a disabled parent or to a child
where one parent is deceased are considered to be support furnished by the
child and not the parent. <51> In addition, where a husband and wife
receive social security benefits in one check in their joint names,
one-half of the total is considered used for the support of each, unless
it is shown otherwise.
Where the claimed dependent is in a government or charitable institution,
any item provided by the institution to the claimed dependent is treated
as furnished by the institution. A lump-sum advance payment to an
agency that is based on the dependent's life expectancy is taken into
account on a pro rata basis, according to that expected term. See IRS
Publication 17, Your Federal Income Tax.
(a)(5) Government Benefits
Benefits under Title II of the Social Security Act received and used for
support of an individual are considered the individual's contribution to
her own support. <54> However, basic and supplementary (Part A and Part B)
Medicare benefits are excluded from the determination of support. Rev.
Rul. 79-173, 1979-1 C.B. 86.
Medicare reimbursements also are excluded, Archer v. Commissioner, 73
T.C. 963 (1980), as are health insurance and health care provided to
dependents of members of the armed forces. Rev. Rul. 64-223, 1964-2 C.B.
50. Premiums paid for supplementary medicare coverage or other government
health insurance are considered support, provided by the person who pays
the premiums. See IRS Publication 17, Your Federal Income Tax.
PRACTICE TIP: This issue often arises in connection with members of
the military who have dependents. In determining whether the member
provided more than half of the support, the part of the allotment
contributed by the government and the amount taken out of her
military pay are both considered to be provided by the member. This
is the case even if the allotment is used to support other family
members, as long as they otherwise qualify for the exemption.
Lodging is part of support. When furnished in kind, its fair rental value
rather than actual cost is taken into account. Reg. Section
1.152-1(a)(2)(i). The fair rental value is the amount that the taxpayer
could reasonably expect to receive from a stranger for providing the same
type of lodging as that furnished to the dependent.
The actual lodging furnished to the dependent, the room, apartment, or
house in which the dependent lives, including a reasonable allowance for
the use of any furnishings, heat, utilities, insurance, repairs, maid and
laundry service, cable television, newspaper, and telephone services for
the residence is taken into account. Muracca v. Commissioner, T.C. Memo.
1984-234. Actual costs for the maintenance and operation of the
residence, such as rent, taxes, interest, depreciation, paint, insurance,
utilities, and gardening expenses are not taken into account, except to
the extent they affect the rental value.
If the dependent lives in his own home, the total fair rental value of the
home is considered support that she provided. Any amount contributed by
another towards lodging (including mortgage payments, fire insurance
premiums, and ordinary repairs) is support furnished by the other person.
The dependent contribution is the fair rental value reduced by the
contributions of others. If a dependent does not live with the taxpayer,
and both contribute towards the cost of the lodging, the fair rental value
is divided between them in proportion to the amount furnished by each.
EXAMPLE 7: Father lives in his own house, which has a fair rental
value of $15,000. Sonny contributes $13,000 to Father's support, of
which Father uses $1,000 to pay real estate taxes on the house. This
$1,000 reduces the fair rental value to $14,000, such that Sonny's
contribution of $13,000 is more than one-half of Father's total
If a taxpayer lives rent free in the dependent's home, the taxpayer's
contribution to the support of the dependent is reduced by the fair rental
value of the lodging received.
(a)(7) Allocation of Household Expenses
Where more than one member of a household contributes towards expenses
that are equally applicable to all members of the household, the
contributors are presumed to have pooled their contributions toward the
support of all members of the household. The total amount expended is
allocated among the members of the household, unless there is proof that a
particular member benefited to a lesser or greater extent. Members
receiving more than they contribute are treated as receiving support from
Support received by a household from an individual outside the household
is allocated equally to each member, unless there is evidence of a
different intention. <60> An individual who contributes more than one-half
of the support for the entire household thus can claim the dependency
exemption for the entire household. The exemption for any could be denied,
however, if she contributes less than one-half of the support of the
entire household, even though her contribution is an amount that exceeds
the cost of one-half of the support of one or more members. An individual
who can show that his contribution was more than one-half of the support
of a particular member of the household and was clearly spent for that
member's support can claim the exemption for that dependent.
EXAMPLE 8: During the year, Walter's parents received $12,000 total
support. $4,000 was provided by the father's social security
benefits, and $8,000 by Walter. Walter is considered to have provided
more than half of the support of both parents. The parents are
treated as a unit. That is, the social security benefits are
allocated evenly between both parents, as are Walter's support
CAUTION: The "unit" rule works both ways and can have an undesirable
effect. If the father's social security benefits are $4,000, but
Walter provides only $3,500 of support, the unit rule bars both
exemptions. In that case the IRS's simplified procedure for assigning
the payments to the mother will save one of the two exemptions.
The IRS has provided a simplified procedure for claiming a specific
household member as a dependent. Rev. Rul. 72-591, 1972-2 C.B. 84.
According to the IRS, the taxpayer may designate (preferably in writing)
that her contribution is intended for the support of a specific person. A
notation on a check is an acceptable designation. An uncontradicted
designation will be accepted.
EXAMPLE 9: Grandfather lives apart from his Daughter (D) and his
Grandson (GS) and Granddaughter (GD). D maintains a household for
herself, GS, and GD. The total spent for the support of the household
is $3,600 for the year. D furnishes $1,920 towards the household from
her earnings. An uncle sends her $30 per month, GS contributes his
earnings of $20 per month and Grandfather sends D $90 per month.
Without any multiple support agreement or designation procedure,
Grandfather is not entitled to any dependency deduction because he
does not contribute more than one-half of the support of any member
of the household. Grandfather could designate on the back of the $90
monthly check that $60 is for the support of GS and $30 is for the
support of GD. This would result in his providing over one-half of
GS's support under the following allocations:
Recipient of Support
Source of Support and Amount Received
D GS GD
--- ---- ----
Daughter (D) $1,080 $ 120 $ 720
Grandson (GS) 0 240 0
Uncle 120 120 120
Grandfather 0 720 360
------ ------ ------
TOTAL $1,200 $1,200 $1,200
====== ====== ======
Support includes the cost of education. Reg. Section 1.152-1(a)(2)(i).
Support includes tuition paid at a private school even though free
public schooling is available. The cost of board and uniforms at
military schools are also included. Atkinson v. Commissioner, 44 T.C. 39
Student loan proceeds count as support in the year the proceeds are used
for education rather than the year the loan is repaid. However, the loan
proceeds count as support furnished by the student, and not a parent, if
the student has the obligation to repay the loan. McCauley v.
Commissioner, 56 T.C. 48 (1971).
Scholarship benefits are not treated as support furnished by anyone; they
do not enter into the total support computation in determining whether a
parent furnished one-half of the support for a student during the year.
<62> Scholarships include educational expenses paid by the Navy under a
Navy ROTC program, Ide v. Commissioner, 335 F.2d 852 (3d Cir. 1964), and
VA payments to orphans, as well as room and board payments by a state to
an institution for mentally retarded children.
EXAMPLE 10: Albert's child received a $10,000 scholarship to Shady
College for one year. Albert expends $2,500 in support for the child,
which constitutes the balance of the child's support for that year.
Albert may claim the child as a dependent, as the scholarship is not
counted in determining the support of the child.
CAUTION: This reflects the rule in Reg. Section 1.152-1(c), above,
that the term "scholarships" has the same meaning as in Code Section
117, excluding certain scholarships from the recipient's gross
income. However, Code Section 152(d) (special support test in case of
students) and its regulations have not been coordinated with the 1986
amendments to Code Section 117 that limit the exclusion to tuition
Scholarships do not include government tuition and other allowances to
veterans under the GI Bill (Reg. Section 1.152-1(c)) or appointments to
an armed service academy. Rev. Rul. 55-347, 1955-1 C.B. 21. The value of
this education is treated as the student's contribution to his own
Payments for life insurance premiums are not treated as part of an
individual's support. For example, in Vance v. Commissioner, 36 T.C.
547 (1961), the Tax Court held that premiums on insurance covering the
life of the dependent and the life of the taxpayer were not support. <65>
However, premiums were considered support when paid by a taxpayer on
insurance covering the life of her former husband, where their children
were beneficiaries. Bollman v. Commissioner, T.C. Memo. 1961-198.
(a)(10) Divorced Parents
Special rules apply to divorced parents. In general, the custodial
parent is treated as providing over one-half of the child's support if the
child is in the custody of one or both of the parents for more than
one-half of the calendar year, and more than one-half of the child's total
support for the calendar year is provided by either or both parents.
Code Section 152(e)(1). Amounts received from the new spouse of a parent
who remarries are treated as provided by the parent for
this purpose. Code Section 152(e)(5). The custodial parent is the parent
who has physical custody for the greater portion of the calendar year.
Code Section 152(e)(1).
The general rule does not apply if the custodial parent releases her claim
to the exemption, over one-half of the support is treated as received from
a taxpayer under a multiple support agreement, or a qualified pre-1985
instrument is in effect.
COMPLIANCE TIP: A custodial parent uses Form 8332, Release of Claim
to Exemption for Child of Divorced or Separated Parents (or a similar
statement) to release the exemption to the non-custodial parent. The
release may be for the current tax year, for specific future years,
or for all future years. The non-custodial parent attaches the
release to his tax return for each year in which he claims the
dependency exemption. The form contains no cancellation date. The IRS
has ruled that the releasing party may not unilaterally revoke her
declaration. CCM 200007031.
CAUTION: The IRS's Office of Chief Counsel has recommended that the
IRS revise IRS Publication 501, Exemptions, Standard
Deduction, and Filing Information, and IRS Publication 504, Divorced
or Separated Individuals, to correct misleading
information in a flow chart regarding the support test for divorced
parents. The Office of Chief Counsel has suggested that the
publications be revised to require the signature of the custodial
parent and to refer to Form 8332. CCM 200224005.
If the custodial parent does not provide the written release, the non-
custodial parent can have great difficulty in convincing the IRS that he
is entitled to the exemption. For example, in Neal v. Commissioner, T.C.
Memo. 1999-97, the Tax Court ruled that the taxpayer could not claim the
child dependency exemption even though he had a state court order
specifying that he was entitled to the exemption.
PRACTICE TIP: In lieu of a signed Form 8332, if a post-1984 divorce
decree or separation agreement unconditionally states that the non-
custodial parent may claim the child as a dependent, that parent may
attach to his return copies of the following: (1) the cover page of
the agreement with the custodial parent's social security number
written on it; (2) the page stating that the non-custodial parent may
claim the exemption for the child; and (3), the signature page
bearing the non-custodial parent's signature and the date of the
agreement. IRS Publication 504, Divorced or Separated
The above exception to the general rule requiring a signed Form 8332 has
been strictly enforced. In Miller v. Commissioner, 114 T.C. 184 (2000),
the Tax Court denied the exemption for the non-custodial parent where the
divorce decree had been signed by the custodial parent's attorney --
instead of by the custodial parent. The Tax Court specifically cited the
signature requirement of Code Section 152(e)(2).
A divorced parent exercising visitation rights can treat the cost of
feeding, entertaining, and transporting his children as support.
Support does not include the cost of transporting children between the
former spouses' homes or any portion of the rental value of the non-
custodial parent's home even if allocable to the child's room.
PRACTICE TIP: If more than half of the child's support comes from one
or both parents, the child will be treated as a dependent of both for
purposes of the medical expense deduction. Therefore a parent can get
a deduction for paying medical expenses of a child even when the
other parent claims the child's dependency exemption. In
addition, the custodial parent who releases the dependency exemption
may still be entitled to the child care credit (Code Section
21(e)(5)), the earned income credit (Code Section 32(c)(3)) and head
of household filing status. However, the child tax credit goes
with the dependency exemption. Therefore, a release of the exemption
by the custodial parent to the non-custodial parent allows the non-
custodial parent the benefit of both the dependency exemption and the
credit. Code Section 24(c)(1)(A).
(b) RELATIONSHIP TEST
(b)(1) In General
An individual must bear one of the following relationships to the taxpayer
to be claimed as a dependent:
(1) a child, or descendant of a child;
(2) a stepchild;
(3) a brother or sister, by whole or half blood;
(4) a stepbrother or stepsister;
(5) a father or mother, or ancestor of either (grandfather,
(6) a stepfather or stepmother;
(7) a son or daughter of a brother, sister, half brother or half
sister (niece or nephew);
(8) a brother or sister of a father or mother (uncle or aunt);
(9) a son-in-law or daughter-in-law;
(10) a father-in-law or mother-in-law; or
(11) a brother-in-law or sister-in-law. <72>
Under the relationship test, a grandnephew or grandniece is not considered
to be a niece or nephew, <73> and the husband of the taxpayer's aunt is
not the taxpayer's uncle. Koester v. Commissioner, 23 T.C. 515 (1954).
However, these individuals may qualify as a dependent of the taxpayer if
they are members of the taxpayer's household and have as their principal
place of abode the home of the taxpayer.
OBSERVATION: If John is married to Jean, and Jean's sister May is
married to Marty, May and Marty are both related to Jean under the
above rules, but only May is related to John; Marty is not. This
would only matter however if John and Jean do not a file a joint
Once a relationship is established, death or divorce does not terminate
it. Thus, for example, the relationship of a son-in-law and mother-in-law
survives the spouse's death or a divorce. Reg. Section 1.152-2(d).
PRACTICE TIP: The same is true for the blood relatives of a
stepchild, stepfather, and stepmother. Although they are not
"relatives" they may qualify as members of the taxpayer's household.
(b)(2) Member of the Taxpayer's Household
Under Code Section 152(a)(9), an individual meets the relationship test
if, for the taxable year of the taxpayer, she has as her principal place
of abode the home of the taxpayer and is a member of the taxpayer's
household. This individual need not be related to the taxpayer in any
way. Reg. Section 1.152-1(b).
OBSERVATION: Code Section 152(a)(9) is designed to enable friends and
distant relatives who are not "relatives" under the definitions
contained in Code Sections 152(a)(1) through (8) to qualify as
dependents of the taxpayer by meeting the "member of the household"
The taxpayer and the individual must both maintain and occupy the same
household. A taxpayer maintains a household if he pays more than one-half
of the household expenses, even though the claimed dependent owns the
home. Rev. Rul. 64-41, 1964-1 C.B. 84. The taxpayer and the claimed
dependent are considered as occupying the household for an entire taxable
year, notwithstanding temporary absences due to special circumstances
such as illness, education, vacation, business, military service, or a
custody agreement under which the claimed dependent is absent for less
than six months in the year. Reg. Section 1.152-1(b). Confinement in a
nursing home for several years because of illness, including the entire
taxable year, is treated as a temporary absence.
A newborn child who becomes a member of the taxpayer's household during a
taxable year is not prevented from being considered a member of the
household for the entire taxable year if the child is required to remain
in the hospital for a period following its birth. The fact that the
claimed dependent dies during the year will not deprive the taxpayer of
the deduction if the dependent lived in the household for the entire part
of the year preceding his death. Reg. Section 1.152-1(b).
An individual is not considered to have been a member of the taxpayer's
household if, at any time during the taxable year, the relationship
between the individual and the taxpayer is in violation of local law.
Code Section 152(b)(5). This rule has not been applied consistently. For
example, in Ensminger v. Commissioner, 610 F.2d 189 (4th Cir. 1979), an
adult man who lived with and supported an unrelated adult woman could not
claim her as a dependent because their relationship was a misdemeanor
under the then applicable state law. <76> On the other hand, in
Shackelford v. Commissioner, 80-1 U.S.T.C. para. 9276 (W.D. Mo. 1980), an
unmarried woman who was living with and supporting a man was allowed to
claim him as a dependent, even though the then applicable state law
provided that "every person, married or unmarried, who shall be guilty of
open, gross lewdness or lascivious behavior, or of any open and notorious
act of public indecency, grossly scandalous, shall, on conviction, be
adjudged guilty of a misdemeanor." The court did not find it unlawful or,
in today's moral climate, either grossly lewd or lascivious, for an
unmarried man and woman to live together.
(b)(3) Domestic Partner as Taxpayer's Dependent
In a series of private letter rulings determining the eligibility of
domestic partners for tax-exempt fringe benefits, such as medical
insurance coverage under Code Section 106 and group-term life insurance
under Code Section 79, the IRS ruled that a domestic partner is not the
taxpayer's spouse under state laws that limit marriage to relationships
between a man and a woman, and is not the taxpayer's dependent under the
Code. <77> However, a careful reading of these rulings indicates that it
is possible for a domestic partner to be the taxpayer's dependent in
Code Section 152(a) defines "dependent" as an individual for whom the
taxpayer provides over half of her support who also is described in one
of nine categories of relationship to the taxpayer. The first eight
categories describe blood or marital relationships, but the ninth
includes an individual (other than the taxpayer's spouse) who for the
taxable year of the taxpayer has as his principal place of abode the home
of the taxpayer and is a member of the taxpayer's household. See Code
Section 152(a)(9). However, an individual is not a member of the
taxpayer's household if the relationship between the taxpayer and the
individual is in violation of local law. See Code Section 152(b)(5).
Thus, under these provisions, a domestic partner could be a dependent of
the taxpayer if the taxpayer provides over half of her support and their
relationship does not violate local law.
Thus, the dependency status of a domestic partner turns on the legality of
their relationship under local law (assuming the support test is
satisfied). In many states, a same-sex relationship does not violate local
law, and in fact, many states and local governments prohibit
discrimination based on sexual orientation. In these locations, it would
appear that a domestic partner would be the taxpayer's dependent (if the
support test and the other dependency tests are satisfied) under the
careful wording of the private letter rulings.
In many other states, however, same-sex relationships are not legal, at
least as far as the laws on the books are considered. In this situation,
even if one party satisfies the dependency tests, (i.e., support,
relationship, gross income, no joint return, and U.S. citizen or residency
tests), the other party may not claim that individual as a dependent on
his tax return since such relationship is in violation of local law.
(c) CITIZENSHIP TEST
An individual must be a United States citizen or resident to be claimed as
a dependent. Code Section 152(b)(3). A person who is not a United States
citizen can be claimed as a dependent if she is a United States national
(e.g., an American Samoan) or a resident of the United States, Canada, or
Mexico at some time during the calendar year in which the taxpayer's
taxable year begins. Code Section 152(b)(3). In the case of a dependent
who is not a U.S. citizen or national, the requirement that the taxpayer
identification number be included on the return is satisfied by including
the dependent's IRS individual taxpayer identification number (TIN).
Reg. Section 301.6109- 1. (The TIN is applied for using Form SS-5.) This
rule has been frequently challenged in court on equal protection grounds,
but it has been uniformly upheld as based on geography, rather than race
or national origin and serving a legitimate administrative purpose.
A taxpayer who is a United States citizen or national may also claim as a
dependent a child who was legally adopted by the taxpayer, has as her
principal place of abode the taxpayer's home, and is a member of the
taxpayer's household. The generally applicable rules regarding the effect
of temporary absences and births and deaths during the taxable year on the
status of an individual as a member of the taxpayer's household also apply
to adopted children. In addition, a child who is adopted during the
taxable year may be claimed as a dependent for the year of adoption if the
child lived with the taxpayer and was a member of the taxpayer's household
for the entire taxable year. Reg. Section 1.152-2(a)(2)(iii).
Exchange students in the United States are not considered United States
(d) GROSS INCOME TEST
An individual with gross income equal to or greater than the exemption
amount during the calendar year in which the taxpayer's taxable year
begins may not be claimed as a dependent by any other taxpayer. The
entire amount of the individual's gross income must be taken into account
without deductions. For example, gross rents are counted, without
reduction for rental expenses or depreciation. <82> A partner's share of
partnership gross income, rather than net income, is counted. Tax-
exempt income is disregarded.
PRACTICE TIP: Because tax-exempt income does not count as gross
income, a parent who, but for the gross income test, could be claimed
as a dependent of a son or daughter should consider generating tax-
free state or municipal bond interest over taxable dividends or
Income received by a permanently and totally disabled individual for
services performed at a sheltered workshop operated by a charity or
governmental unit is not counted in applying the gross income test, if the
availability of the medical care is the principal reason for the
individual's presence in the workshop, and the income arises solely from
workshop activities that are incidental to the medical care. Code Section
151(c)(5)(A). For these purposes, a sheltered workshop is a school that
provides special instruction or training designed to alleviate the
disability of the individual, and that is operated either by a tax exempt
charitable organization described in Code Section 501(c)(3), a state or
United States possession (or one of its subdivisions), or by the United
States or the District of Columbia. Code Section 151(c)(5)(B).
A permanently and totally disabled individual is an individual who is
unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment that can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve months. A person is not
considered to be permanently and totally disabled unless proof is
furnished of the existence of the disability in the form and manner and at
the time required by the IRS regulations. Code Section 151(c)(5)(C)
(incorporating by reference Code Section 22(e)(3)).
OBSERVATION: As discussed earlier, the gross income text does not
apply to a child of the taxpayer who either has not reached age 19 at
the end of the calendar year on which the taxpayer's tax year begins
or is a student who has not reached age 24 at the close of the
calendar year. Code Section 151(c)(1)(B).
(e) JOINT RETURN TEST
A taxpayer cannot claim a dependency exemption for a married individual
who files a joint return for a tax year beginning in the same calendar
year in which the taxpayer's taxable year begins. Code Section
151(c)(2). The exemption may be claimed, however, if neither the married
dependent nor his spouse is required to file a return, even if they do
file to claim a refund of tax withheld.
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