Case Study - Support Test for a Dependent
Troy Smith owns a home in which he lives with his wife, two children, and his mother, Blanche. Blanche is a U.S. citizen and receives annual pension benefits of $3,000, of which $1,800 is taxable gross income. She spends her entire pension on clothing, recreation, and other support items.
Troy's total food expenses for the household were $5,000. He also paid his mother's medical expenses, amounting to $4,000. The fair rental value of the room furnished to Blanche, based on the cost of comparable rooming facilities, was $2,400 per year.
Blanche's total support is computed as follows:
| Fair rental value of lodging: |
$ 2,400 |
| Direct expenses paid by Blanche: |
3,000 |
| Medical expenses paid by Troy: |
4,000 |
| Blanche's share of food expenses: |
1,000 |
| Total support: |
$10,400 |
Because Troy furnished support worth $7,400, he paid more than one-half of Blanche's support and can claim her as a dependent.
If we change the facts slightly to provide Blanche with nontaxable Social Security benefits of $8,000 in addition to her $3,000 pension, she would remain Troy's dependent as long as she spent less than Troy did ($7,400) on her own support. The remainder of her pension and benefits could be saved or invested, perhaps with the idea that upon her death the savings would go to Troy's children.
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