According to a recent survey, 43% of men and 36% of women, ages 18-34, still live their parents.
Although it can be tricky, there are a few tax deductions for parents and other ways you can offset the costs of letting those adult children stay in the nest, during the tax season.
Claim Your Child as A Dependent
You can claim your child as a dependent if he / she earns less than $4000 per year and you provide 50% or more of his/ her support.
To claim tax exemption, you should be able to prove that you are paying more than half of the child’s expenses.
However, you can not claim tax exemption if your child is more than 24 years of age, has a job and isn’t disabled.
Make Him/ Her Your Tenant
You can take deductions for utilities and other costs if you turn your basement or a spare bedroom into a rental and have your child pay the rent.
In order to make this work for you, you need to keep track of all expenses and report the rental income.
Hire Your Child
If you are self-employed, putting your child on the payroll is worth it, if you are supporting him/ her in any way. The money you pay becomes a business expense and shifts the money in the child’s tax bracket, which is probably lower. Plus, he/ she will have a job to do.
Tax Help MD
Have an adult child living at home and need to offset the costs during the tax season? Let our experts at Tax Help MD help you figure out what to claim on taxes. Call us now on 888-632-4506 and get the help you need.