Over the past several years, many individuals experiencing economic challenges have relied on the financial and housing help of parents, children, and other family members. According to the Pew Research Center that analyzes U.S. Census Bureau data, 51.4 million Americans lived in multi-generational households in 2009, up from 46.5 million in 2007. But what about individuals or families who provide housing and support to non-relatives? Forbes reports that in some cases, non-relatives may qualify as dependents also, thereby reaping a tax break for the head of household (”When A Housemate Is a Dependent (And A Tax Break)”).
One exemption per dependent can mean a $3700 deduction on an upcoming tax return. So who are the dependents you support? And can you legally report them as such? Here are some general guidelines:
- Parents can claim their children who are under the age of 19 and who live with them for more than half the year. Full-time college students under the age of 24 also qualify as dependents.
- Heads of households can claim a relative or non-relative who is a U.S. citizen, does not file a joint return, and earned less than $3700 in the past year (not including Social Security or disability pay).
- Relatives, such as an elderly parent in a nursing home, are not required to live in the same residence to qualify as dependents, but non-relatives must share the same address as their benefactors.
Refer to the IRS for more information on claiming dependents (”Six Important Facts about Dependents and Exemptions”). Consult with your accountant or tax preparer for additional guidelines.