Jane Taxpayer and her three brothers each provide 20% of the assisted mother, whose only income comes from Social Security and lives in an assisted housing centre. At the beginning of a year, they meet and compare tax situations to determine which siblings would benefit the most from tax benefits at the federal, regional and communal level by reselling the mother as dependent. When refunds arrive, the person applying for the exemption gives each of his or her siblings a cheque for one quarter of the total tax benefit. One of the unique things about the multiple support agreement is that in order for someone to be considered a qualified parent, the person applying for it to free themselves from addiction must provide more than half of the UNLESS person`s assistance, “there are exceptions for several support devices, children of divorced or separated parents (or separated parents) and abducted children.” (Publication 17) A multiple assistance agreement is a document signed by two or more taxpayers who provide financial assistance to a single dependent person. This agreement allows several individuals who jointly assist a creditor to take turns asserting that person as dependent on their tax return. Several helps are needed when several children contribute to the assistance of an elderly parent. To resolve these tax controversies, the IRS`s lawyer proposed a simple solution. The father could waive his right to call on our client`s relatives, thus paving the way for our client to solicit his loved ones via Form 2120, Multiple Support Agreement. This form is quite important at a time when no one offers more than half of a person`s help. As the name suggests, multiple support means that two or more people who could claim the person as a dependent, with the exception of the assistance test, together provide more than half of a dependent`s assistance.
The LITC was able to receive an affidavit from the client`s father, renouncing his right to solicit relatives, and our client was able to affix the completed form that designated his right to access relatives. In this case, the multiple support agreement allowed our client to solicit dependent people. (2) Any member of the group who, together, provided more than half of the individual`s assistance would have the right to assert the person as dependent, but because he did not contribute more than half of that assistance. NEW YORK (MainStreet) As a general rule, the person must be either your qualified child or a qualified parent to be able to claim that someone is dependent on your tax return. To be a qualified parent for 2013, the person must be either a member of your household for the whole year or a parent, have a gross taxable income of less than $3,900 and receive more than half of your total assistance from you. THE LITC recently resolved a case for one of LITC`s youngest clients – a 22-year-old student who supported three members of his budget in the previous fiscal year. However, the IRS did not allow these dependency exemptions. The IRS did not believe that our client provided more than half of the assistance to his two nephews.
The IRS was led to believe this because the client did not have receipts and paid everything in cash. For this reason, they do not have cheque or credit card statements or essential receipts. At the IRS, it appeared that the main supplier of the household was the client`s father. However, the father did not specifically support the relatives claimed by our client, which gave our client leeway to maintain his original registration status and claim the three persons as dependent. 4. Any other person in the group who has contributed more than 10% of this assistance provides the subject with a written declaration that that the other person will not claim the person as an employee for a taxable year from that calendar year.