Taxmap/pubs/p501-003.htm#TXMP4e6e4487
Exemptions

Figure A. Can You Claim an Exemption for a Dependent?   

Taxmap/pubs/p501-003.htm#TXMP7d8e9c89 Child tax credit.

You may be entitled to a child tax credit for each of your qualifying children for whom you can claim an exemption. For more information, see the instructions in your tax forms package.

Taxmap/pubs/p501-003.htm#TXMP7b2dc304 Dependency Tests

Dependency Tests

The following five tests must be met for you to claim an exemption for a dependent.

• 1. Member of Household or Relationship Test.
• 2. Citizen or Resident Test.
• 3. Joint Return Test.
• 4. Gross Income Test.
• 5. Support Test.

Taxmap/pubs/p501-003.htm#TXMP6278ca8e 1. Member of Household or     Relationship Test

1. Member of Household or Relationship Test

To meet this test, a person must either:

1. Live with you for the entire year as a member of your household, or
2. Be related to you in one of the ways listed later under Relatives who do not have to live with you.

If at any time during the year the person was your spouse, that person cannot be your dependent. However, see Personal Exemptions, earlier.

Taxmap/pubs/p501-003.htm#TXMP6e709aec Temporary absences.

A person lives with you as a member of your household even if either (or both) of you are temporarily absent due to special circumstances. Temporary absences due to special circumstances include absences because of illness, education, business, vacation, or military service.

If the person is placed in a nursing home for an indefinite period of time to receive constant medical care, the absence is considered temporary.

Taxmap/pubs/p501-003.htm#TXMP227368d1 Death or birth.

A person who died during the year, but was a member of your household until death, will meet the member of household test. The same is true for a child who was born during the year and was a member of your household for the rest of the year. The test is also met if a child would have been a member except for any required hospital stay following birth.

Taxmap/pubs/p501-003.htm#TXMP67dea2ac Local law violated.

A person does not meet the member of household test if at any time during your tax year the relationship between you and that person violates local law.

Taxmap/pubs/p501-003.htm#TXMP50fbb259
Example.

Your girlfriend lived with you as a member of your household all year. However, your relationship with her violated the laws of the state where you live, because she was married to someone else. Therefore, she does not meet this test and you cannot claim her as a dependent.

Taxmap/pubs/p501-003.htm#TXMP71ed07cb Relatives who do not have to live with you.

A person related to you in any of the following ways does not have to live with you for the entire year as a member of your household to meet this test.

• Your child, grandchild, great grandchild, etc. (A legally adopted child is considered your child.)
• Your stepchild.
• Your brother, sister, half brother, half sister, stepbrother, or stepsister.
• Your parent, grandparent, or other direct ancestor, but not foster parent.
• Your stepfather or stepmother.
• A brother or sister of your father or mother.
• A son or daughter of your brother or sister.
• Your father-in-law, mother-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law.

Any of these relationships that were established by marriage are not ended by death or divorce.

Taxmap/pubs/p501-003.htm#TXMP34d4bd35 Adoption.

Even if your adoption of a child is not yet final, the child is considered to be your child if he or she was placed with you for legal adoption by an authorized placement agency. The child must also be a member of your household, but does not have to be a member of your household for the entire year.

If the child was not placed with you by an authorized placement agency, the child will meet this test only if he or she was a member of your household for your entire tax year.

Taxmap/pubs/p501-003.htm#TXMP553be8f6 Authorized placement agency.

An authorized placement agency includes any person or court authorized by state law to place children for legal adoption.

Taxmap/pubs/p501-003.htm#TXMP286e0cf5 Foster child.

A foster child must live with you as a member of your household for the entire year to qualify as your dependent. For this test, a foster child is one who is in your care that you care for as your own child. It does not matter how the child became a member of the household.

Taxmap/pubs/p501-003.htm#TXMP4ec53630 Cousin.

You can claim an exemption for your cousin only if he or she lives with you as a member of your household for the entire year. A cousin is a descendant of a brother or sister of your father or mother.

Taxmap/pubs/p501-003.htm#TXMP2d12adcf Joint return.

If you file a joint return, you do not need to show that a person is related to both you and your spouse. You also do not need to show that a person is related to the spouse who provides support.

For example, your spouse's uncle who receives more than half of his support from you may be your dependent, even though he does not live with you. However, if you and your spouse file separate returns, your spouse's uncle can be your dependent only if he is a member of your household and lives with you for your entire tax year.

Taxmap/pubs/p501-003.htm#TXMP334f113b 2. Citizen or Resident Test

You cannot claim an exemption for a dependent unless that person is a U.S. citizen or resident, or a resident of Canada or Mexico, for some part of the calendar year in which your tax year begins. However, there is an exception for certain adopted children, as explained next.

Taxmap/pubs/p501-003.htm#TXMP1f189fc4 Children's place of residence.

Children usually are citizens or residents of the country of their parents.

If you were a U.S. citizen when your child was born, the child may be a U.S. citizen although the other parent was a nonresident alien and the child was born in a foreign country. If so, and the other dependency tests are met, you can take the exemption. It does not matter if the child lives abroad with the nonresident alien parent.

Taxmap/pubs/p501-003.htm#TXMP1e1bd54e Adopted child.

If you are a U.S. citizen who has legally adopted a child who is not a U.S. citizen or resident, and the other dependency tests are met, you can take the exemption if your home is the child's main home and the child is a member of your household for your entire tax year.

Taxmap/pubs/p501-003.htm#TXMP1b2e4a14 Foreign students' place of residence.

Foreign students brought to this country under a qualified international education exchange program and placed in American homes for a temporary period generally are not U.S. residents and do not meet the citizen or resident test. You cannot claim an exemption for them. However, if you provided a home for a foreign student, you may be able to take a charitable contribution deduction. See Expenses Paid for Student Living With You in Publication 526, Charitable Contributions.

Taxmap/pubs/p501-003.htm#TXMP45a45102 3. Joint Return Test

Joint Return Test

Even if the other dependency tests are met, you generally are not allowed an exemption for your dependent if he or she files a joint return.

Taxmap/pubs/p501-003.htm#TXMP76139899
Example.

You supported your daughter for the entire year while her husband was in the Armed Forces. The couple files a joint return. Even though all the other tests are met, you cannot take an exemption for your daughter.

Taxmap/pubs/p501-003.htm#TXMP6fdb4362 Exception.

The joint return test does not apply if a joint return is filed by the dependent and his or her spouse merely as a claim for refund and no tax liability would exist for either spouse on separate returns.

Taxmap/pubs/p501-003.htm#TXMP7265f05c
Example.

Your son and his wife each had less than $3,000 of wages and no unearned income. Neither is required to file a tax return. Taxes were taken out of their pay, so they filed a joint return to get a refund. You are allowed to take exemptions for your son and daughter-in-law if the other dependency tests are met, even though they filed a joint return.

Taxmap/pubs/p501-003.htm#TXMP7c4e101e 4. Gross Income Test

Gross Income Test

Generally, you cannot take an exemption for a dependent if that person had gross income of $3,100 or more for 2004. This test does not apply if the person is your child and is either:

1. Under age 19 at the end of the year, or
2. A student under age 24 at the end of the year.

The exceptions for children under age 19 and students under age 24 are discussed in detail later.

If you file on a fiscal year basis, the gross income test applies to the calendar year in which your fiscal year begins.

Taxmap/pubs/p501-003.htm#TXMP31b1c1d0 Gross income defined.

All income in the form of money, property, and services that is not exempt from tax is gross income.

In a manufacturing, merchandising, or mining business, gross income is the total net sales minus the cost of goods sold, plus any miscellaneous income from the business.

Gross receipts from rental property are gross income. Do not deduct taxes, repairs, etc., to determine the gross income from rental property.

Gross income includes a partner's share of the gross (not a share of the net) partnership income.

Gross income also includes all unemployment compensation and certain scholarship and fellowship grants. Scholarships received by degree candidates that are used for tuition, fees, supplies, books, and equipment required for particular courses may not be included in gross income. For more information about scholarships, see chapter 1 of Publication 970, Tax Benefits for Education.

Tax-exempt income, such as certain social security payments, is not included in gross income.

Taxmap/pubs/p501-003.htm#TXMP31d5f724 Disabled dependents.

For this gross income test, gross income does not include income received by a permanently and totally disabled individual for services performed at a sheltered workshop. The availability of medical care must be the main reason the individual is at the workshop. Also, the income must come solely from activities at the workshop that are incident to this medical care. A sheltered workshop is a school operated by certain tax-exempt organizations, or by a state, a U.S. possession, a political subdivision of a state or possession, the United States, or the District of Columbia, that provides special instruction or training designed to alleviate the disability of the individual.

Taxmap/pubs/p501-003.htm#TXMP742d7dbf Child defined.

For purposes of the gross income test, your child is your son, stepson, daughter, stepdaughter, a legally adopted child, or a child who was placed with you by an authorized placement agency for your legal adoption. A foster child who was a member of your household for your entire tax year is also considered your child.

Taxmap/pubs/p501-003.htm#TXMP44775508 Child under age 19.

If your child is under 19 at the end of the year, the gross income test does not apply. Your child can have any amount of income and you still can claim an exemption if the other dependency tests, including the support test, are met.

Taxmap/pubs/p501-003.htm#TXMP030bc987
Example.

Marie, 18, earned $4,000. Her father provided more than half her support. Because Marie is under 19, the gross income test does not apply. If the other dependency tests were met, Marie's father can claim an exemption for her.

Taxmap/pubs/p501-003.htm#TXMP69645c74 Student under age 24.

The gross income test does not apply if your child is a student who is under age 24 at the end of the calendar year. The other dependency tests still must be met.

Taxmap/pubs/p501-003.htm#TXMP33e73557 Student defined.

To qualify as a student, your child must be, during some part of each of 5 calendar months during the calendar year (not necessarily consecutive):

1. A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or
2. A student taking a full-time, on-farm training course given by a school described in (1) above or a state, county, or local government.

Taxmap/pubs/p501-003.htm#TXMP214c4fe9 Full-time student defined.

A full-time student is a person who is enrolled for the number of hours or courses the school considers to be full-time attendance.

Taxmap/pubs/p501-003.htm#TXMP4d6b3d15 School defined.

The term "school" includes elementary schools, junior and senior high schools, colleges, universities, and technical, trade, and mechanical schools. It does not include on-the-job training courses, correspondence schools, and night schools.

Taxmap/pubs/p501-003.htm#TXMP0568672c
Example.

James, 22, attends college as a full-time student. During the summer, James earned $4,000. If the other dependency tests are met, his parents can take the exemption for James.

Taxmap/pubs/p501-003.htm#TXMP25f31cf8 Vocational high school students.

People who work on "co-op" jobs in private industry as a part of the school's prescribed course of classroom and practical training are considered full-time students.

Taxmap/pubs/p501-003.htm#TXMP10636987 Night school.

Your child is not a full-time student while attending school only at night. However, full-time attendance at a school can include some attendance at night as part of a full-time course of study.

Taxmap/pubs/p501-003.htm#TXMP2462524b 5. Support Test

Support Test

Generally, you must provide more than half of a person's total support during the calendar year to meet the support test. However, there are special rules that apply in the following two situations.

1. Two or more persons provide support, but no one person provides more than half of a person's total support. See Multiple Support Agreement, later.
2. The person supported is the child of divorced or separated parents. See Support Test for Child of Divorced or Separated Parents, later.

Taxmap/pubs/p501-003.htm#TXMP094fab41 How to determine if test is met.

You figure whether you have provided more than half of a person's total support by comparing the amount you contributed to that person's support with the entire amount of support that person received from all sources. This includes support the person provided from his or her own funds.

You may find Worksheet 1 helpful in figuring whether you provided more than half of a person's support.

Taxmap/pubs/p501-003.htm#w15000u2001

Worksheet 1.   Worksheet for Determining Support Funds Belonging to the Person You Supported          1. Enter the total funds belonging to the person you supported, including income received (taxable and nontaxable) and amounts borrowed during the year, plus the amount in savings and other accounts at the beginning of the year 1.          2. Enter the amount on line 1 that was used for the person's support 2.          3. Enter the amount on line 1 that was used for other purposes 3.          4. Enter the total amount in the person's savings and other accounts at the end of the year 4.          5. Add lines 2 through 4. (This amount should equal line 1.) 5.          Expenses for Entire Household (where the person you supported lived)          6. Lodging (complete line 6a or 6b):               6a. Enter the total rent paid 6a.               6b. Enter the fair rental value of the home. If the person you supported owned the home, also include this amount in line 20. 6b.          7. Enter the total food expenses 7.          8. Enter the total amount of utilities (heat, light, water, etc. not included in line 6a or 6b) 8.          9. Enter the total amount of repairs (not included in line 6a or 6b) 9.          10. Enter the total of other expenses. Do not include expenses of maintaining the home, such as mortgage interest, real estate taxes, and insurance. 10.          11. Add lines 6a through 10. These are the total household expenses 11.          12. Enter total number of persons who lived in the household 12.          Expenses for the Person You Supported          13. Divide line 11 by line 12. This is the person's share of the household expenses 13.          14. Enter the person's total clothing expenses 14.          15. Enter the person's total education expenses 15.          16. Enter the person's total medical and dental expenses not paid for or reimbursed by insurance 16.          17. Enter the person's total travel and recreation expenses 17.          18. Enter the total of the person's other expenses 18.          19. Add lines 13 through 18. This is the total cost of the person's support for the year 19.          Did You Provide More Than Half?          20. Enter the amount from line 2, plus the amount from line 6b if the person you supported owned the home. This is the amount the person provided for his or her own support 20.          21. Enter the amount others provided for the person's support. Include amounts provided by state, local, and other welfare societies or agencies. Do not include any amounts included on line 1. 21.          22. Add lines 20 and 21 22.          23. Subtract line 22 from line 19. This is the amount you provided for the person's support 23.          24. Multiply line 19 by 50% (.50) 24.          Is line 23 more than line 24? Yes. You meet the support test for the person. If the other dependency tests are met, you can claim an exemption for the person. No. You do not meet the support test for the person. You cannot claim an exemption for the person unless you can do so under a multiple support agreement. See Multiple Support Agreement later in this publication.

Taxmap/pubs/p501-003.htm#TXMP66fe1cad Person's own funds not used for support.

A person's own funds are not support unless they are actually spent for support.

Taxmap/pubs/p501-003.htm#TXMP23e14d62
Example.

Your mother received $2,400 in social security benefits and $300 in interest. She paid $2,000 for lodging and $400 for recreation. She put $300 in a savings account.

Even though your mother received a total of $2,700, she spent only $2,400 for her own support. If you spent more than $2,400 for her support and no other support was received, you have provided more than half of her support.

Taxmap/pubs/p501-003.htm#TXMP295b64ee Child's wages used for own support.

You cannot include in your contribution to your child's support any support that is paid for by the child with the child's own wages, even if you paid the wages.

Taxmap/pubs/p501-003.htm#TXMP2b24ff3d Year support is provided.

The year you provide the support is the year you pay for it, even if you do so with borrowed money that you repay in a later year.

If you use a fiscal year to report your income, you must provide more than half of the dependent's support for the calendar year in which your fiscal year begins.

Taxmap/pubs/p501-003.htm#TXMP4fd708cd Armed Forces dependency allotments.

The part of the allotment contributed by the government and the part taken out of your military pay are both considered provided by you in figuring whether you provide more than half of the support. If your allotment is used to support persons other than those you name, you can take the exemptions for them if they otherwise qualify.

Taxmap/pubs/p501-003.htm#TXMP312bdb74
Example.

You are in the Armed Forces. You authorize an allotment for your widowed mother that she uses to support herself and your sister. If the allotment provides more than half of their support, you can take an exemption for each of them, if they otherwise qualify, even though you authorize the allotment only for your mother.

Taxmap/pubs/p501-003.htm#TXMP5c393c5b Tax-exempt military quarters allowances.

These allowances are treated the same way as dependency allotments in figuring support. The allotment of pay and the tax-exempt basic allowance for quarters are both considered as provided by you for support.

Taxmap/pubs/p501-003.htm#TXMP5fcc9cd5 Tax-exempt income.

In figuring a person's total support, include tax-exempt income, savings, and borrowed amounts used to support that person. Tax-exempt income includes certain social security benefits, welfare benefits, nontaxable life insurance proceeds, Armed Forces family allotments, nontaxable pensions, and tax-exempt interest.

Taxmap/pubs/p501-003.htm#TXMP74b1196c
Example 1.

You provide $4,000 toward your mother's support during the year. She has earned income of $600, nontaxable social security benefit payments of $4,800, and tax-exempt interest of $200. She uses all these for her support. You cannot claim an exemption for your mother because the $4,000 you provide is not more than half of her total support of $9,600.

Taxmap/pubs/p501-003.htm#TXMP4ed07700
Example 2.

Your daughter takes out a student loan of $2,500 and uses it to pay her college tuition. She is personally responsible for the loan. You provide $2,000 toward her total support. You cannot claim an exemption for your daughter because you provide less than half of her support.

Taxmap/pubs/p501-003.htm#TXMP2b470fa8 Social security benefit payments.

If a husband and wife each receive payments that are paid by one check made out to both of them, half of the total paid is considered to be for the support of each spouse, unless they can show otherwise.

If a child receives social security benefits and uses them toward his or her own support, the payments are considered as provided by the child.

Taxmap/pubs/p501-003.htm#TXMP1a45acb2 Support provided by the state (welfare, food stamps, housing, etc.).

Benefits provided by the state to a needy person generally are considered support provided by the state. However, payments based on the needs of the recipient will not be considered as used entirely for that person's support if it is shown that part of the payments were not used for that purpose.

Taxmap/pubs/p501-003.htm#TXMP420612c2 Foster care payments and expenses.

Payments you receive for the support of a foster child from a child placement agency are considered support provided by the agency. Similarly, payments you receive for the support of a foster child from a state or county are considered support provided by the state or county.

If you are not in the trade or business of providing foster care and your unreimbursed out-of-pocket expenses in caring for a foster child were mainly to benefit an organization qualified to receive deductible charitable contributions, the expenses are deductible as charitable contributions, but are not considered support you provided. For more information about the deduction for charitable contributions, see Publication 526. If your unreimbursed expenses are not deductible as charitable contributions, they are considered support you provided.

If you are in the trade or business of providing foster care, your unreimbursed expenses are not considered support provided by you.

Taxmap/pubs/p501-003.htm#TXMP3e44bb19
Example.

Lauren, a foster child, lived with Mr. and Mrs. Smith. The Smiths cared for Lauren because they wanted to adopt her, not as a trade or business or to benefit the agency that placed her in their home. The Smiths' unreimbursed expenses are not deductible as charitable contributions, but are considered support they provided for Lauren.

Taxmap/pubs/p501-003.htm#TXMP0f614449 Home for the aged.

If you make a lump-sum advance payment to a home for the aged to take care of your relative for life and the payment is based on that person's life expectancy, the amount of support you provide each year is the lump-sum payment divided by the relative's life expectancy. The amount of support you provide also includes any other amounts that you provided during the year.

Taxmap/pubs/p501-003.htm#TXMP4fc75ea9 Total Support

To figure if you provided more than half of a person's support, you must first determine the total support provided for that person. Total support includes amounts spent to provide food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities.

Generally, the amount of an item of support is the amount of the expense incurred in providing that item. For lodging, the amount of support is the fair rental value of the lodging.

Expenses that are not directly related to any one member of a household, such as the cost of food for the household, must be divided among the members of the household.

Taxmap/pubs/p501-003.htm#TXMP51a1eb08
Example 1.

Grace Brown, mother of Mary Miller, lives with Frank and Mary Miller and their two children. Grace gets social security benefits of $2,400, which she spends for clothing, transportation, and recreation. Grace has no other income. Frank and Mary's total food expense for the household is $5,200. They pay Grace's medical and drug expenses of $1,200. The fair rental value of the lodging provided for Grace is $1,800 a year, based on the cost of similar rooming facilities. Figure Grace's total support as follows:

Fair rental value of lodging		$ 1,800
Clothing, transportation and recreation		2,400
Medical expenses		1,200
Share of food (1/5 of $5,200)		1,040
Total support		$6,440

 

Because the support Frank and Mary provide ($1,800 lodging + $1,200 medical expenses + $1,040 food = $4,040) is more than half of Grace's $6,440 total support, and Grace meets the other dependency tests, they can claim an exemption for her.

Taxmap/pubs/p501-003.htm#TXMP5b1168c0
Example 2.

Your parents live with you, your spouse, and your two children in a house you own. The fair rental value of your parents' share of the lodging is $2,000 a year, which includes furnishings and utilities. Your father receives a nontaxable pension of $4,200, which he spends equally between your mother and himself for items of support such as clothing, transportation, and recreation. Your total food expense for the household is $6,000. Your heat and utility bills amount to $1,200. Your mother has hospital and medical expenses of $600, which you pay during the year. Figure your parents' total support as follows:

Support provided	Father	Mother
Fair rental value of lodging	$1,000	$1,000
Pension spent for their support	2,100	2,100
Share of food (1/6 of $6,000)	1,000	1,000
Medical expenses for mother		600
Parents' total support	$4,100	$4,700

You must apply the support test separately to each parent. You provide $2,000 ($1,000 lodging, $1,000 food) of your father's total support of $4,100 — less than half. You provide $2,600 to your mother ($1,000 lodging, $1,000 food, $600 medical) — more than half of her total support of $4,700. You meet the support test for your mother, but not your father. Heat and utility costs are included in the fair rental value of the lodging, so these are not considered separately.

Taxmap/pubs/p501-003.htm#TXMP72cdeebc Lodging.

If you provide a person with lodging, you are considered to provide support equal to the fair rental value of the room, apartment, house, or other shelter in which the person lives. Fair rental value includes a reasonable allowance for the use of furniture and appliances, and for heat and other utilities that are provided.

Taxmap/pubs/p501-003.htm#TXMP3c3698eb Fair rental value defined.

This is the amount you could reasonably expect to receive from a stranger for the same kind of lodging. It is used instead of actual expenses such as rent or taxes, interest, depreciation, paint, insurance, utilities, cost of furniture and appliances, etc. In some cases, fair rental value may be equal to the rent paid.

If you provide the total lodging, the amount of support you provide is the fair rental value of the room the person uses, or a share of the fair rental value of the entire dwelling if the person has use of your entire home. If you do not provide the total lodging, the total fair rental value must be divided depending on how much of the total lodging you provide. If you provide only a part and the person supplies the rest, the fair rental value must be divided between both of you according to the amount each provides.

Taxmap/pubs/p501-003.htm#TXMP25d59713
Example.

Your parents live rent free in a house you own. It has a fair rental value of $5,400 a year furnished, which includes a fair rental value of $3,600 for the house and $1,800 for the furniture. This does not include heat and utilities. The house is completely furnished with furniture belonging to your parents. You pay $600 for their utility bills. Utilities are not usually included in rent for houses in the area where your parents live. Therefore, you consider the total fair rental value of the lodging to be $6,000 ($3,600 fair rental value of the unfurnished house, $1,800 allowance for the furnishings provided by your parents, and $600 cost of utilities) of which you are considered to provide $4,200 ($3,600 + $600).

Taxmap/pubs/p501-003.htm#TXMP37d0bc1a Person living in his or her own home.

The total fair rental value of a person's home that he or she owns is considered support contributed by that person.

Taxmap/pubs/p501-003.htm#TXMP48cb47e8 Living with someone rent free.

If you live with a person rent free in his or her home, you must reduce the amount you provide for support by the fair rental value of lodging he or she provides you.

Taxmap/pubs/p501-003.htm#TXMP052c8b00 Property.

Property provided as support is measured by its fair market value. Fair market value is the price that property would sell for on the open market. It is the price that would be agreed upon between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts.

Taxmap/pubs/p501-003.htm#TXMP0326a8fe Capital expenses.

Capital items, such as furniture, appliances, and cars, that are bought for a person during the year can be included in total support under certain circumstances.

The following examples show when a capital item is or is not support.

Taxmap/pubs/p501-003.htm#TXMP59a9f4f1
Example 1.

You buy a $200 power lawn mower for your 13-year-old child. The child is given the duty of keeping the lawn trimmed. Because a lawn mower is ordinarily an item you buy for personal and family reasons that benefits all members of the household, you cannot include the cost of the lawn mower in the support of your child.

Taxmap/pubs/p501-003.htm#TXMP31df86db
Example 2.

You buy a $150 television set as a birthday present for your 12-year-old child. The television set is placed in your child's bedroom. You can include the cost of the television set in the support of your child.

Taxmap/pubs/p501-003.htm#TXMP5220e143
Example 3.

You pay $5,000 for a car and register it in your name. You and your 17-year-old daughter use the car equally. Because you own the car and do not give it to your daughter but merely let her use it, you cannot include the cost of the car in your daughter's total support. However, you can include in your daughter's support your out-of-pocket expenses of operating the car for her benefit.

Taxmap/pubs/p501-003.htm#TXMP01d58414
Example 4.

Your 17-year-old son, using personal funds, buys a car for $4,500. You provide all the rest of your son's support — $4,000. Since the car is bought and owned by your son, the car's fair market value ($4,500) must be included in his support. The $4,000 support you provide is less than half of his total support of $8,500. You cannot claim an exemption for your son.

Taxmap/pubs/p501-003.htm#TXMP426c90b5 Medical insurance premiums.

Medical insurance premiums you pay, including premiums for supplementary Medicare coverage, are included in the support you provide.

Taxmap/pubs/p501-003.htm#TXMP2ce70c10 Medical insurance benefits.

Medical insurance benefits, including basic and supplementary Medicare benefits, are not part of support.

Taxmap/pubs/p501-003.htm#TXMP1c6c0ccd Tuition payments and allowances under the GI Bill.

Amounts veterans receive under the GI Bill for tuition payments and allowances while they attend school are included in total support.

Taxmap/pubs/p501-003.htm#TXMP0e1455a5
Example.

During the year, your son receives $2,200 from the government under the GI Bill. He uses this amount for his education. You provide the rest of his support — $2,000. Because GI benefits are included in total support, your son is not your dependent.

Taxmap/pubs/p501-003.htm#TXMP4cd71fe5 Child care expenses.

If you pay someone to provide child care or disabled dependent care, you can include these payments in the amount you provided for the support of your child or disabled dependent, even if you claim a credit for the payments. For information on the credit, see Publication 503, Child and Dependent Care Expenses.

Taxmap/pubs/p501-003.htm#TXMP7cc80c23 Other support items.

Other items may be considered as support depending on the facts in each case.

Taxmap/pubs/p501-003.htm#TXMP6d6d0efe Do Not Include   in Total Support

The following items are not included in total support.

1. Federal, state, and local income taxes paid by persons from their own income.
2. Social security and Medicare taxes paid by persons from their own income.
3. Life insurance premiums.
4. Funeral expenses.
5. Scholarships received by your child if your child is a full-time student.
6. Survivors' and Dependents' Educational Assistance payments used for the support of the child who receives them.

Taxmap/pubs/p501-003.htm#TXMP31528473 Multiple Support Agreement

Multiple Support Agreement

Sometimes no one provides more than half of the support of a person. Instead, two or more persons, each of whom would be able to take the exemption but for the support test, together provide more than half of the person's support.

When this happens, you can agree that any one of you who individually provides more than 10% of the person's support, but only one, can claim an exemption for that person. Each of the others must sign a statement agreeing not to claim the exemption for that year. The person who claims the exemption must keep these signed statements for his or her records. A multiple support declaration identifying each of the others who agreed not to claim the exemption must be attached to the return of the person claiming the exemption. Form 2120, Multiple Support Declaration, can be used for this purpose.

Taxmap/pubs/p501-003.htm#TXMP429f01d9
Example 1.

You, your sister, and your two brothers provide the entire support of your mother for the year. You provide 45%, your sister 35%, and your two brothers each provide 10%. Either you or your sister can claim an exemption for your mother. The other must sign a statement agreeing not to take an exemption for your mother. The one who claims the exemption must attach Form 2120, or a similar declaration, to his or her return and must keep the statement signed by the other for his or her records. Because neither brother provides more than 10% of the support, neither can take the exemption and neither has to sign a statement.

Taxmap/pubs/p501-003.htm#TXMP3ba2043d
Example 2.

You and your brother each provide 20% of your mother's support for the year. The remaining 60% of her support is provided equally by two persons who are not related to her. She does not live with them. Because more than half of her support is provided by persons who cannot claim an exemption for her, no one can take the exemption.

Taxmap/pubs/p501-003.htm#TXMP06bf2dd4
Example 3.

Your father lives with you and receives 25% of his support from social security, 40% from you, 24% from his brother, and 11% from a friend. Either you or your uncle can take the exemption for your father if the other signs a statement agreeing not to. The one who takes the exemption must attach Form 2120, or a similar declaration, to his return and must keep for his records the signed statement from the one agreeing not to take the exemption.

Taxmap/pubs/p501-003.htm#TXMP7f5847f4 Support Test for Child of   Divorced or Separated Parents

Support Test for Child of Divorced or Separated Parents

The support test for a child of divorced or separated parents is based on the special rules explained here and shown in Figure B. However, these special rules apply only if all the following are true.

1. The parents are divorced or legally separated under a decree of divorce or separate maintenance, or separated under a written separation agreement, or lived apart at all times during the last 6 months of the calendar year.
2. One or both parents provide more than half of the child's total support for the calendar year.
3. One or both parents have custody of the child for more than half of the calendar year.

"Child" is defined earlier under 4. Gross Income Test.

This discussion does not apply if the support of the child is determined under a multiple support agreement, discussed earlier.

Taxmap/pubs/p501-003.htm#TXMP5448890f General rule.

The parent who has custody of the child for the greater part of the year (the custodial parent) is generally treated as the parent who provides more than half of the child's support. It does not matter whether the custodial parent actually provided more than half of the support.

Taxmap/pubs/p501-003.htm#TXMP5292facc Custody.

Custody is usually determined by the terms of the most recent decree of divorce or separate maintenance, or a later custody decree. If there is no decree, use the written separation agreement. If neither a decree nor agreement establishes custody, then the parent who has the physical custody of the child for the greater part of the year is considered to have custody of the child. This also applies if the validity of a decree or agreement awarding custody is uncertain because of legal proceedings pending on the last day of the calendar year.

If the parents are divorced or separated during the year and had joint custody of the child before the separation, the parent who has custody for the greater part of the rest of the year is considered to have custody of the child for the tax year.

Taxmap/pubs/p501-003.htm#TXMP4979f996
Example 1.

Under the terms of your divorce, you have custody of your child for 10 months of the year. Your former spouse has custody for the other 2 months. You and your former spouse provide the child's total support. You are considered to have provided more than half of the support of the child. However, see Exception, later.

Taxmap/pubs/p501-003.htm#TXMP2cf042b6
Example 2.

You and your former spouse provided your child's total support for 2004. For the first 8 months of the year, you had custody of your child under your 1996 divorce decree (the most recent decree at the time). On August 31, 2004, a new custody decree granted custody to your former spouse. Because you had custody for the greater part of the year, you are considered to have provided more than half of your child's support, unless the exception described next applies.

Taxmap/pubs/p501-003.htm#TXMP06b38258 Exception.

The noncustodial parent will be treated as providing more than half of the child's support if:

1. The custodial parent signs a written declaration, discussed later, that he or she will not claim the exemption for the child, and the noncustodial parent attaches this written declaration to his or her return,
2. The custodial parent signed a decree or agreement executed after 1984 stating that he or she will not claim the exemption for the child and that the noncustodial parent can claim an exemption for the child without regard to any condition such as payment of support, and the noncustodial parent attaches to his or her return the documentation described later under Divorce decree or separation agreement made after 1984, or
3. A decree or agreement executed before 1985 provides that the noncustodial parent is entitled to the exemption, and he or she provides at least $600 for the child's support during the year, unless the pre-1985 decree or agreement is modified after 1984 to specify that this provision will not apply.