In some cases, a taxpayer`s situation may meet all the conditions for claiming support, with the exception of the last one, which provides more than half of the support. For example, a group of siblings could all step in to pay for the cost of supporting an aging parent. One of them could bear most of the responsibility of “dad,” including living in his house, but she can`t claim it as dependent because she doesn`t bear most of the costs herself. That`s where Form 2120 comes in. Each taxation year, a person can ask the parent to be dependent, provided that he meets the necessary conditions and presents a multiple support contract. Depending on the situation, they may choose to change who makes this request each year. LITC recently resolved a case for one of LITC`s youngest clients – a 22-year-old student who supported three members of his household in the previous tax year. However, the IRS did not allow these dependency exemptions. The IRS did not believe that our client provided more than half of the support to his two nephews. The IRS was made to believe this because the client had no receipts and paid everything in cash. In this case, he does not have a cheque or credit card statements or essential receipts. It appeared to the IRS that the main supplier of the household was the client`s father. However, the father did not specifically provide support to the dependents claimed by our client, which gave our client leeway to maintain their original connection status and claim the three dependents.
One of the peculiarities of the multiple support agreement is that the person applying for relief from the dependant must provide more than half of the person`s support, unless “there are exceptions to multiple support agreements, children of divorced or separated parents (or parents who live separately) and abducted children.” (Publication 17) A multiple support agreement is a document signed by two or more taxpayers who provide financial assistance to a single dependant. This agreement allows several persons who jointly support a dependant to take turns claiming that person as dependent on their tax returns. Multiple support arrangements are required if several children are contributing to the support of an older parent. Any other person in the group who has provided more than 10% of this support will provide the subject with a written statement that the other person will not apply for the person as an employee for a taxation year beginning with that calendar year. Each taxation year, a person can ask the parent that they need child support, as long as they meet the requirements and submit a multiple assistance contract. Depending on the situation, they may choose to rotate those who claim it each year. In situations where programs such as social security or other public support funds provide most of the support to dependents, no one can claim that the person is dependent. For example, if two children offer 20% support and Social Security offers 60% of the assistance, no child can claim that their parent is dependent. To resolve these tax controversies, IRS counsel proposed a simple solution. (3) The group member who claims that the person is dependent has contributed more than 10% of the person`s support, and in situations where programs such as social security or other public support funds provide the majority of support to relatives, no one can claim that the person is dependent.
For example, if two children provide 20% of the alimony and Social Security provides 60% of the alimony, neither child can claim that his parent is dependent. 3. A taxable person who claims that he is dependent for a tax year beginning after 31 December 2001 shall retain the derogations and should be prepared to provide the derogations and any other information necessary to support the claim. which may include a statement indicating the names of all contributors (whether or not they are members of the group described in Article 152(c)(2)) and the amount paid by each to support the reported addict. .