Would I be wrong for Claiming my SISTER on taxes?
Hey you guys. I work a 3rd shift job, go to school full time. I have my own apartment and pay all my utilities as well. Back in December, my younger sister (she's 21, I'm 22) moved in with me. Basically, I've been supporting her up until 2 weeks ago. She's into drugs, and partying..and not wanting to get a job. We got in a fight, and she moved out.
I was told that I could claim her as a dependent on my taxes? Would that be right/wrong? I mean shit, when she moved in with me..I spent $400 just on getting her a new wardrobe cause she looked homeless :'(
I just feel like I need to be repaid in some sort of way. What do you guys think?
Re: Would I be wrong for Claiming my SISTER on taxes?
Well, you got me wondering, so I looked around a bit. I found this site and read up on it a bit, but maybe there will be an accountant girlie or someone that has done this before to give you specifics. Until then, though, here ya go! :)
http://www.bankrate.com/brm/itax/tips/20010208a.asp
"For a taxpayer to be able to subtract the exemption amount from his income, the person being claimed must pass five basic tax dependency tests:
1. Member of Household or Relationship Test: The person must live in your home all year or, if they live elsewhere, must be a qualified relative. Relatives the IRS will allow you to claim but who do not have to live with you include: your child (by birth or legal adoption), stepchild, grandchild, great grandchild, brother, sister, step- or half-sibling, parent, stepparent, grandparent, aunt, uncle, niece, nephew or immediate in-laws. There are special rules for foster children and cousins, as well as exceptions for dependents who are born or die during the tax year.
2. Citizenship or Resident Test: The person must be either a U.S. citizen or resident or a resident of Canada or Mexico for at least some part of the tax year for which the person is claimed. A child of U.S. parents (or even one U.S. parent) is usually considered a citizen, even if the baby was born in another country. And your adopted child doesn't have to be a citizen; as long as the child lives with you and is a member of your household for the entire year, you can claim him.
3. Joint Return Test: You cannot claim as a dependent anyone who files a joint tax return with someone else. The IRS does grant an exception here if the joint return was filed solely to claim a refund of tax withheld.
4. Gross Income Test: The person's gross income must be less than the annual exemption amount, which is $3,100 for the 2004 tax year. This restriction doesn't apply to children younger than 19 at the end of the tax year or who are full-time students under the age of 24.
5. Support Test: The taxpayer must have provided more than half the person's total support. This includes food, clothing, shelter, education, medical expenses and recreational costs. The IRS makes exceptions in cases where several taxpayers have signed a multiple support agreement (for example, children caring for a parent) and where the dependent is a child is supported by divorced parents."
Hope this helps!
Re: Would I be wrong for Claiming my SISTER on taxes?
it sounds like the answer is yes ... but ! The yes is that claiming your sister is probably legitimate based on the fact that she lived with you and that you met the five tests listed above.
The but, and it could be a BIG but (no pun intended) is that if you do claim your sister as a dependent this will create an official federal/state record linking your sister's social security number to your own social security number and your own address. This info will then be available in law enforcement databases, leading to a distinct possibility that if your sister gets into legal trouble in the future (which sounds rather likely from your comments), that YOU might be investigated right along with your sister. IMHO a few hundred dollars in tax savings is not worth creating this possibility.
Re: Would I be wrong for Claiming my SISTER on taxes?
The calendar also hurts your case CK. 2 weeks ago was the halfway point in 2005 so you are right in the "half" border on the calendar. That makes it harder to demonstrate you provided half of her annual support.
If she comes to her senses and moves back in with you for a couple months the case would get a lot stronger.
Re: Would I be wrong for Claiming my SISTER on taxes?
I agree with Monty, because she is your sister she did/does not have to live with you the entire year, but if she moved out in June you come up a little short on the "provided at least half her support" thing. the fact she lived with you in Dec. does not matter in this case the clock for the tax year starts Jan. 1 if she moves back in with you for a little while then your case would be stronger.
Some may say "well how is the IRS going actually know just when she moved out?" the reality is they won't. the only problem would come if she lived with someone else, parents, boyfriend, whatever and then they tried to claim her because she lived with them more than half the year.
Is ther any chance your parent/s are still trying to claim her? Some parents after getting that deduction for all those years hate to give it up, even if they are not really entitled to it any more.
Re: Would I be wrong for Claiming my SISTER on taxes?
Well off topic but I hope your sister gets better and everything works out.
Re: Would I be wrong for Claiming my SISTER on taxes?
The length of time hurts you along with the risk that she actually gets a job this year and earns more money. Also, if she files a tax return there will be a conflict within the IRS database and one of you will receive IRS letters, etc. I agree that the December time doesn't help with the 2005 support question. The risk associated with law enforcement linking you and your sister because of tax filings isn't a major risk in my opinion, but you may be required to demonstrate that you met the actual support tests and time tests.
When filing next year, I recommend that you compare the financial benefits with the additional reporting risks along with some coordination with your sister.
I too hope that your sister figures out that you are a positive influence and helpful.
Regards,
Dan