3.2 Qualifying Relative Tests & Support Agreements

An individual who does not meet the five qualifying child tests may qualify as a dependent under the qualifying relative provisions of IRC §152(d). Tax practitioners frequently encounter qualifying relative determinations when clients support elderly parents, disabled adult children, adult siblings, or unrelated domestic partners.

The Four Qualifying Relative Tests

To be claimed as a qualifying relative, an individual must satisfy all four statutory tests:

Qualifying Relative Requirements (IRC §152(d)):
1. Not a Qualifying Child Test --> Cannot be taxpayer's or anyone else's qualifying child
2. Relationship / Household Test --> Specified relative (no residency needed) OR 365-day household member
3. Gross Income Test           --> Gross taxable income must be strictly LESS than $5,050 (2025)
4. Support Test                --> Taxpayer must provide MORE THAN 50% of person's total support

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In-Depth Analysis of the Four Tests

1. Not a Qualifying Child Test

An individual cannot be claimed as a qualifying relative if they are the qualifying child of the taxpayer or of any other taxpayer. For example, if a 10-year-old child lives with her mother and meets all qualifying child tests for the mother, an uncle who lives in the same house and provides 70% of the household support cannot claim the niece as a qualifying relative.

2. Relationship or Member of Household Test

An individual can satisfy this test under one of two mutually exclusive paths:

Path A: Specified Relatives (Do NOT have to live with the taxpayer) The following individuals qualify by relationship and can reside anywhere (their own home, a nursing facility, or independent living), provided the taxpayer meets the support and income tests:

• Lineal Ancestors: Parents, grandparents, great-grandparents.
• Lineal Descendants: Children, grandchildren, great-grandchildren, legally adopted children, stepchildren, eligible foster children.
• Siblings: Brothers, sisters, half-brothers, half-sisters, stepbrothers, stepsisters.
• Collateral Relatives (Blood Only): Aunts and uncles (defined strictly as the brother or sister of the taxpayer's father or mother).
• Descendants of Siblings (Blood Only): Nieces and nephews (defined strictly as the son or daughter of the taxpayer's brother or sister).
• In-Laws: Father-in-law, mother-in-law, brother-in-law, sister-in-law, son-in-law, daughter-in-law.

The In-Law Survival Rule: In-law relationships established by a valid legal marriage do not end with divorce or the death of the spouse. If a taxpayer's spouse passes away or the couple divorces, the taxpayer's mother-in-law remains a qualifying relative by relationship for tax purposes indefinitely.

Path B: Member of the Household for the Entire Year (Non-Relatives & Cousins) Any individual who is not listed under Path A can only satisfy the test if they lived as a member of the taxpayer's household for the entire 365-day tax year (January 1 through December 31). Temporary absences (vacations, hospital stays) are permitted, but the taxpayer's home must be the individual's principal place of abode for the full year.

The Cousin Trap: First cousins and second cousins are NOT specified relatives under Path A. A cousin can only be claimed as a qualifying relative if they lived in the taxpayer's household for all 365 days of the calendar year.

Legality Requirement: Under IRC §152(f)(3), an individual does not qualify as a member of the household if the relationship between the individual and the taxpayer violates local law.

3. Gross Income Test ($5,050 for 2025)

The prospective dependent's gross taxable income for the calendar year must be strictly less than the statutory exemption threshold: $5,050 for 2025 (indexed upward from $5,000 for 2024).

Critical Exam Application (Social Security): If an elderly parent's only income is $18,000 of Social Security benefits, none of those benefits are taxable under IRC §86. Because the parent's gross taxable income is $0, the parent easily passes the gross income test ($0 < $5,050).

4. Support Test (>50% Total Support)

The taxpayer must provide more than 50.0% of the individual's total support during the calendar year. Unlike the qualifying child support test, the focus here is on the percentage of support provided by the taxpayer.

$\text{Support Percentage} = \frac{\text{Support Provided by Taxpayer}}{\text{Total Support from All Sources}} > 50.0\%$

Calculating Lodging Support: Lodging is measured by the fair market rental value (FMRV) of the room or dwelling, which includes a reasonable allowance for use of furnishings, heat, water, and utilities. It is never measured by mortgage payments, property taxes, or original purchase price.

Comprehensive Support Example: Carlos supports his 72-year-old mother, Elena, who lives in an apartment. During 2025, Elena's total support expenses are $24,000:

• Elena pays $10,000 from her Social Security benefits for food and medical care.
• Carlos pays $14,000 directly for Elena's rent, utilities, and prescription drugs.

Analysis: Elena's total support is $24,000. Carlos provided $14,000, which is 58.33% ($14,000 / $24,000). Because Carlos provided more than 50%, the support test is satisfied. Since Elena's Social Security was nontaxable, she had $0 gross taxable income (<$5,050), satisfying the gross income test. Carlos can claim Elena as a qualifying relative.

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Multiple Support Agreements (IRC §152(d)(3) & Form 2120)

In many families, adult siblings jointly support an elderly parent, but no single sibling provides more than 50% of the parent's total support. Under IRC §152(d)(3), the siblings can designate one eligible family member to claim the parent under a Multiple Support Agreement:

Statutory Requirements for Form 2120:

1. Group Support: More than half (>50%) of the individual's total support was provided by a group of persons who would each have been entitled to claim the individual except for the support test.
2. No Single Majority: No single person provided more than 50% of the total support.
3. 10% Threshold: The taxpayer claiming the dependent must have provided more than 10% (>10.0%) of the total support.
4. Written Waiver (Form 2120): Each other person in the group who contributed more than 10% must sign a written statement waiving their claim to the dependent for that year (using Form 2120, Multiple Support Declaration). Persons who contributed 10% or less do not sign.

Application: The group (A + B + C + D) provided $24,000 (70% of $30,000). Child A, B, or C may claim the parent. If Child A claims the parent, Child B and Child C must sign Form 2120. Child D contributed exactly 10.0% (not more than 10%), so Child D cannot claim the parent and is not required to sign Form 2120.

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Form 8332: Release of Claim for Divorced or Separated Parents

Under IRC §152(e), the custodial parent (the parent with whom the child lived for the greater number of nights during the year) is entitled to claim the child as a dependent. However, the custodial parent may release the claim to the non-custodial parent by signing Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent.

The Split Benefit Rule (Extremely High-Frequency Exam Topic): When Form 8332 is executed, tax benefits are split strictly by statute:

Exam Takeaway: Form 8332 releases the dependency claim and the benefits that follow it—the CTC, ACTC, ODC, and education credits for the child's expenses. The custodial parent always retains Head of Household, the Earned Income Tax Credit, and the Child and Dependent Care Credit. The non-custodial parent can never use Form 8332 to file as Head of Household or claim the EITC.