How to Qualify an Adult Relative for a Tax Exemption

You can normally take an exemption on your Federal income tax return for each of your dependents in addition to your personal exemptions. A dependent is usually your qualifying child, but it can also be a qualifying relative. The adult relative's gross income must be less than the allowable exemption amount for the year, and you must provide over half the total support during the year.

Instructions

Difficulty: Moderately Easy

1. Review the tests for a qualifying relative which can be a child or an adult. Relatives don't have to live with you all year to be a qualifying dependent.
2. Determine if the adult relative has gross income of less than the current year exemptions amount. Gross income includes wages and gross receipts, not net receipts after expenses are deducted, from business or rental property.
3. Provide over half the support for the adult relative taking into account funds received for support from others and funds earned by the relative which were used for support. Earnings include unemployment compensation but not social security benefits.
4. Sign a multiple support agreement if more than one individual is providing support to the relative but no one provides over half. The agreement identifies the individual who can claim the exemption as long as that person provides over 10 percent of the support.