Qualifying Relative Test (4 Tests)

A qualifying relative is one of two types of dependents you can claim on your tax return (the other being a qualifying child). The qualifying relative rules allow taxpayers to claim elderly parents, adult children who no longer meet the qualifying child tests, and other relatives they support financially.

To claim someone as a qualifying relative, the person must pass four tests. Use the memory device SING to remember them:

• S - Support Test
• I - Income (Gross Income) Test
• N - Not a Qualifying Child Test
• G - Relationship or Member of Household Test (Group)

Important: In addition to these four tests, the person must also meet the joint return test (cannot file a joint return, except solely to claim a refund) and the citizenship test (must be a U.S. citizen, U.S. resident alien, U.S. national, or resident of Canada or Mexico).

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Test 1: Support Test

The support test requires that the taxpayer provide more than 50% of the person's total support for the calendar year.

What Counts as Support

Support includes amounts spent to provide:

Fair Rental Value for Lodging

If you provide someone lodging in your home, the support you provide equals the fair rental value (FRV) of the room or space they occupy. Fair rental value includes:

• What the room would rent for on the open market
• A reasonable allowance for furniture and appliances
• A portion of utilities (heat, electricity, water)

Example: Your mother lives in a bedroom in your house. A similar room in your area would rent for $800/month. You provide $9,600/year ($800 x 12) in lodging support, even though you don't actually write a rent check.

What Does NOT Count as Support

The following items are not included in the support calculation:

• Federal, state, and local income taxes paid by the person
• Social Security and Medicare taxes (FICA)
• Life insurance premiums
• Funeral expenses
• Scholarships received by the person

Calculating the Support Percentage

To determine if you provided more than 50% of support:

1. Add up total support the person received from ALL sources (including their own funds)
2. Add up the support YOU provided
3. Divide your support by total support

Example: You support your elderly father. His total support for 2024 was $24,000:

• You paid: $15,000 (lodging FRV, food, medical)
• His Social Security used for support: $9,000

Your support percentage: $15,000 / $24,000 = 62.5% - You pass the support test.

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Multiple Support Agreement (Form 2120)

When no single person provides more than 50% of support, but two or more people together provide more than 50%, one of them may be able to claim the dependent using a Multiple Support Agreement.

Requirements for Form 2120

1. No one person provided more than 50% of support
2. Two or more people together provided more than 50% of support
3. Each person who contributed would be able to claim the dependent except for the support test
4. The person claiming the dependent must have provided at least 10% of support
5. All others who contributed more than 10% must sign statements waiving their right to claim the dependent

How It Works

Example: Three siblings support their mother. Her total support is $30,000.

• Sarah: $10,000 (33%)
• Michael: $8,000 (27%)
• Jennifer: $6,000 (20%)
• Mother's own funds: $6,000 (20%)

No one provides more than 50%, but the three siblings together provide 80% ($24,000). Any sibling who contributed at least 10% can claim the mother if the others sign Form 2120 waiving their right.

If Sarah claims the dependent:

• Sarah attaches Form 2120 to her return
• Michael and Jennifer each sign statements waiving their right for 2024
• Sarah gets to claim the dependent on her return

Form 2120 Statement Requirements

Each person waiving their right must provide a signed statement including:

• Their waiver of the right to claim the dependency
• The calendar year the waiver applies to
• The name of the qualifying relative being supported
• Their name, address, and Social Security number

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Test 2: Gross Income Test

For 2024, the person's gross income must be less than $5,050.

What Counts as Gross Income

Gross income includes all income that is NOT exempt from tax:

Gross Income vs. Net Income

For self-employment and rental activities, gross income means gross receipts - NOT net profit. However, the gross income test for qualifying relatives uses net self-employment income in many contexts. Check IRS Publication 501 for the specific activity.

Taxable vs. Nontaxable Social Security

This is a critical distinction for the EA exam:

• If Social Security is nontaxable (below the threshold for taxation), it does NOT count toward the $5,050 gross income limit
• If Social Security is taxable (some portion included in income), the taxable portion counts

Example: Your aunt receives $18,000 in Social Security benefits. Based on her provisional income, only $4,000 is taxable. Her only other income is $800 in bank interest. Her gross income for the qualifying relative test is:

• Taxable Social Security: $4,000
• Bank interest: $800
• Total gross income: $4,800 (under $5,050 - she passes!)

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Test 3: Not a Qualifying Child Test

The person cannot be the qualifying child of you or any other taxpayer.

Why This Test Exists

This test prevents "double claiming." A person who qualifies as someone's qualifying child under those rules cannot also be claimed as a qualifying relative by a different taxpayer.

Example: Your 20-year-old niece lives with her parents (your sister's family) and is her parents' qualifying child. Even if you provide significant financial support, you cannot claim her as your qualifying relative because she is someone else's qualifying child.

Key Point for the Exam

If a person meets ALL the qualifying child tests for ANY taxpayer, that person cannot be anyone's qualifying relative - even if no one actually claims them as a qualifying child.

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Test 4: Relationship or Member of Household Test

The person must either:

1. Be related to you in one of the ways listed by the IRS, OR
2. Live with you all year as a member of your household

Relatives Who Do NOT Need to Live with You

These relatives qualify without living in your home:

Note: Aunts, uncles, nieces, and nephews must be related by blood to qualify without living with you. Aunts or uncles by marriage must live with you.

Non-Relatives Must Live with You

If someone is not on the list above, they must live with you for the entire year as a member of your household to qualify.

Examples of non-relatives who could qualify (if they live with you all year):

• Your boyfriend or girlfriend
• A friend you support
• Your cousin (cousins are NOT on the relatives list!)
• A foster parent

Relationship Cannot Violate Local Law

The relationship between you and the person living in your household cannot violate local law. For example, if you are married and a state has laws against cohabitation with someone other than your spouse, that person may not qualify.

In-Law Relationships Survive Death or Divorce

Important: A relationship established by marriage (in-laws) is not ended by death or divorce. Your former mother-in-law remains your mother-in-law for dependency purposes even after your spouse dies or you divorce.

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Qualifying Child vs. Qualifying Relative: Comparison Table

Key Differences to Remember

1. Age Test: Only qualifying children have an age test. A qualifying relative can be any age.
2. Income Test: Only qualifying relatives have a gross income limit ($5,050). Qualifying children have no income limit.
3. Support Direction: For qualifying children, the child must NOT provide more than half of their own support. For qualifying relatives, the taxpayer must provide more than half.
4. Residency: Qualifying children need more than half the year. Qualifying relatives either need the whole year (non-relatives) or no residency at all (listed relatives).

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Tax Benefits for Qualifying Relatives

When you claim a qualifying relative as a dependent, you may be entitled to:

Note: Qualifying relatives do NOT qualify you for the Child Tax Credit (up to $2,000) or the earned income-related portion of EITC. Those require a qualifying child.

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Exam Tips

1. Know the $5,050 threshold for 2024 - The gross income limit is a frequent exam topic
2. Nontaxable income doesn't count - Nontaxable Social Security, SSI, and veterans' benefits are excluded from gross income
3. Support includes fair rental value - Don't forget to calculate FRV for lodging
4. Form 2120 requires 10% minimum - To claim under a multiple support agreement, you must have provided at least 10%
5. Cousins are NOT listed relatives - Cousins must live with you all year to qualify
6. In-law relationships continue - Death or divorce doesn't end the in-law relationship
7. No age limit for qualifying relatives - Unlike qualifying children, age is irrelevant