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| "Qualifying Relative" for Tax Purposes |
To be a "qualified relative" with respect to a particular taxpayer, three tests must be met:
- A relationship test, and
- A gross income test, and
- A support test
In addition, special rules apply for multiple support agreements and income of handicapped dependents, ands there is a special support test in case of students. Also, it should be noted that a person cannot be a "qualified relative" for a taxable year if that person is a "qualifying child" for any taxpayer in that taxable year.
Relationship Test
To satisfy this test, the person must have one of several family relationships to the taxpayer, such as niece or nephew, or the person must have the same principal abode as the taxpayer and be a member of the taxpayer's household. The relationship that will almost always be relevant to divorced or separated taxpayers is that of a child or grandchild.
Gross Income Test
To be a "qualifying relative," an individual's gross income for the calendar year in which the taxable year begins must be less than the personal exemption amount for that tax year. The personal exemption amount for the 2007 tax year is $3,400.
Support Test
To satisfy this test and be a "qualifying relative," the taxpayer must provide over one-half of the individual's support for the calendar year in which the taxable year begins.
Special Rule for Multiple Support Agreements
Where there is a multiple support agreement, special rules apply for determining which taxpayer has provided over one-half of an individual's support for a calendar year. In such cases, over one-half of the support of an individual for a calendar year is treated as received from the taxpayer if the following conditions are met:
- No one person contributed over one-half of the individual's support
- Over one-half of the individual's support was received from two or more persons and those persons would have been able to claim the individual as a dependent if they had in fact paid over one-half of the individual's support
- The taxpayer contributed over 10 percent of the individual's support, and
- Each person described in the second bullet above (other than the taxpayer) who contributed over 10 percent of the individual's support files a written declaration the he or she will not claim the individual as a dependent for any taxable year beginning in that calendar year.
Special Rule for Determining Gross Income of Handicapped Dependents
In determining whether an individual meets the gross income test for purposes being a "qualifying relative,' the gross income of an individual who is permanently and totally disabled at any time during the taxable year does not include income earned at a sheltered workshop if:
- the availability of medical care at that workshop is the principal reason for the individual's presence there, and
the income arises solely from activities at that workshop that are incident to that medical care.
Special Rules Relating to Students
For purposes of determining if a taxpayer has provided over one-half of an individual's support in order for that individual to be a "qualifying relative," a special rule applies if the individual is a child of the taxpayer and a student. In such instances, amounts received as scholarships for study at an educational organization are not taken into account.
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