In some situations, you may be able to claim a parent as a dependent. Also, you might claim that a non-parent who lives in your home as a dependent. Each dependency exemption provides a $3,050 deduction in 2003.
To qualify, your parent, friend, or other relative must be a U.S. citizen or a resident of North America. He or she can’t file a joint tax return, unless the return is filed only to receive a refund for taxes paid. Two other criteria must be met.
Gross income. The dependent’s gross income must be below $3,050 in 2003.
Support. You must provide over half of what it costs for that person to live during the year.
The gross income test may be easier to pass than you think. If someone’s Social Security benefits are not taxed, they’re not included in gross income, for this purpose. That usually will be the case for an elderly person who might be a dependent. Gifts, insurance proceeds, and tax-exempt interest also are excluded from the gross income calculation. If your parent’s gross income is just over $3,050, try to get below that amount. Bank CDs or bonds paying taxable interest might be switched to tax-exempt bonds or funds.
