Dear Tax Talk,
I have a son from a previous relationship, and his mother died in April. I've had custody of him since her death. I applied for Social Security survivors benefits for him and was approved. I receive approximately $1,050 per month from Social Security on his behalf. He is also disabled with autism. He attends a regular high school as an exceptional student with an individual education program for severe autism. He doesn't work or draw any other income. My wife and I make a combined total gross salary of approximately $130,000 a year. How will my son's Social Security benefits affect our taxes? Will any part of his benefits be taxable? Will I still be able to claim him as a dependent?
Your son's Social Security survivors benefits will not affect your taxes in any way since you do not have to report his Social Security income on your tax return. In fact, because your son has no other income, he will not have to file a tax return for this monthly $1,050 benefit as it is not taxable to him.
As to the issue of claiming your son as a dependent, initially it looks like you should be able to claim him, but you will need to run some calculations to determine if you truly can. First, you pass the test of having the dependent child live with you for more than half the year since he moved in permanently in April. Your child also meets the age and education requirements by being younger than the age of 24 and being a full-time student.
With these hurdles out of the way, the only question left is the issue of financial support. In order for him to qualify as a dependent, you must provide more than half of the financial support for your son over the course of the year.
What qualifies as financial support? According to the Internal Revenue Service it can include food, lodging, clothing, education, medical and dental care, recreation, transportation and any other similar necessities. Calculate household expenses such as rent/housing, electricity, heating, water and food and divide the total by the number of people in the household to determine your son's "share" of the expenses. Add in all of his other expenses throughout the year, including any related to his autism treatment. If you have paid more than half of this amount, then your son will qualify as a dependent on your tax return.