Tax Tips for the Multi-generational Home
The multi-generational home is making a comeback. It’s not just Millennials who are moving back with their Generation X parents. In addition, Generation Xers are welcoming their Baby Boomer parents into the household. There can be many benefits to this living arrangement. The recent uptick began when the recession hit, but families are now choosing the multi-generational home for more than just financial reasons.
In many instances, Baby Boomers who are moving in with their children and grandchildren may have health issues. Generation X clients in these multi-generational households often ask their CPAs if they are able to claim their parents as dependents for income tax purposes.
In an article from CPA Practice Advisor, Gigi Thompson Jarvis lists some of the criteria parents must meet in order to qualify as dependents:
- The parent must be legally recognized – by adoption or by birth – as the child’s parent
- Parents must receive more than 50% of their financial support from their children
- The parent must be a U.S. citizen, or a resident of Mexico or Canada
- The parent must not file a joint return with a spouse, unless it is solely for the purpose of receiving a tax refund
“He or she must not be required to file a federal income tax return,” adds Jarvis. “If your parent is under 65 and filing Single, they must file a return if their income is at least $10,350; filing Single and over 65, at least $11,900; Married Filing Jointly and under 65, at least $20,700; Married Filing Jointly and over 65, at least $21,950.”
Our CPAs can answer any questions you have about claiming parents or adult children as dependents. Call us today for any of your income tax needs.
To read more, see the full article from Gigi Thompson Jarvis in CPA Practice Advisor.