Is My Disabled Adult Child Still a Qualifying Child for Income Tax Purposes?

By: Raquelle Echelberger, Paralegal Student at Columbus State Community College

Edited by Logan Philipps, Attorney at Law

A common question among parents with an adult child with a disability is “Can I still claim my adult child as a dependent on my income taxes?” Yes, if you provide more than half (50%) of your child’s support for the year. 

For income tax purposes, a dependent is a qualifying child or relative for whom a filer provides qualifying financial support. The Internal Revenue Service (IRS) allows children of any age to be declared dependents so long as the individual meets the general dependency rules set forth by the IRS: the child must be permanently and totally disabled, live with the claiming parent for more than half the year and receive more than half of their support from the claiming parent.

How do parents determine if they supply more than 50% of a child’s financial support for the year?  That's math: Take Total Parent Support and divide it by Total Support.

Determining Total Expenses (AKA Total Support) – How much does it cost for your child to live his/her life?

The parent must first establish the total expenses associated with the disabled person for the year. Strangely, the IRS calls Total Expenses, “Total Support.”  Total support includes amounts spent to provide food, lodging, clothing, education, medical and dental care, travel and recreation, transportation, and similar necessities for the disabled individual.

Consider the following when determining total expenses:

Day to Day Expenses—The day to day expenses that aren’t large on their own. Clothing, gas for cars, activities (movies, dinners, bowling, etc.), food (divided among the number of household members if using a household total), gaming, subscription services, internet, books, education, uncovered medical and dental expenses, recreational items and costs, transportation, and similar expenditures. 

Lodging—A disabled child’s housing support is equal to the “fair rental value” of the room, apartment, house, or other shelter in which the individual lives. The IRS defines fair rental value as “the amount you could reasonably expect to receive from a stranger for the same kind of lodging.” It can be the fair rental value of the room the child uses, or a proportional share of the fair rental value of the entire dwelling if the child uses the entire home.

Typically, fair rental value includes most actual home expenses such as taxes, interest, depreciation, insurance, and the cost of furnishings. It also may include utilities, depending on what is typical for rentals in a specific area.

Capital Expenses—Furniture, carpet, bedding, appliances, and cars, bought for a person during the year can be included in total support under certain circumstances. Essentially, the expenses need to be in support of the person to be counted, not just available for use by the person.

Medical Insurance Premiums/Benefits—Medical insurance premiums, including premiums for supplementary Medicare coverage, are considered support. 

Supported Care Expenses—Money is paid to another person to support an individual in the community or in the home (often called dependent care) is considered support for the disabled individual, even if the payments are claimed as a tax credit on a tax return.

Determining the Parent Support?

To calculate the Parent Support, the claiming parent should ask the following questions: “Where does the money to pay these expenses come from” or put more bluntly, “How much of my money do I spend on my child?”

This should be straight forward.  However, the claiming parent should be sure to not shortchange themselves. 

Lodging—If the claiming parent owns the home in which the child resides, the parent is providing support equal to the fair rental value of the room the child uses, or a proportional share of the fair rental value of the entire dwelling if the child uses the entire home, as described earlier. NOTE: If the child has a rental obligation for the use of the parent’s home, that amount of the fair market value is considered contributed by the child and should not be included in parent support.

Day to Day Expenses—Often claiming parents don’t consider the everyday expenses that can really add up.  Be sure to consider all the items listed above in “Day to Day Expenses” but don’t forget about things like the child’s share of “smaller” items:  Toilet paper, paper towels, housecleaning, laundry detergent, dish soap.  Think of all the things bought at Costco.

Potential Pitfall: The person’s own funds—Any money the disabled child earns or receives (like SSI or SSDI) and is spent for the child is part of that child’s contribution to total support. Funds “saved” in bank accounts or ABLE accounts by the person are not considered part of that person’s support until they are used.

Getting over the 50% Hurdle

Once a claiming parent has determined a disabled person’s total expenses and the parent support, all that is left to do is simple division.  At this point, it is easy to see if a claiming parent has provided at least half of the adult disabled child’s support. If the parent has met the other IRS criteria, the parent should be able to declare his or her adult disabled child as a qualifying child dependent on a tax return.

Disclaimer:  The information in this article is not, nor is it intended to be, legal or tax advice. You should consult an attorney and/or a Certified Public Account for advice regarding your individual situation.