Learn something new every day More Info... by email
The support test is one of the standards used to determine whether a person qualifies as a dependent for tax, financial aid, and other matters. There are two ways to view the test. According to one standard, if a person manages to meet more than half of the financial needs for a year, that person is not considered a dependent. Other tests do this in reverse, determining that someone who pays more than half of another person's financial needs for a year may be able to claim the person as a dependent. There are several other standards considered in addition to the support test when evaluating whether someone is a dependent.
Another issue is age, with people in specific age ranges being potentially considered dependents. There is also a residency test, mandating that dependents live in the same home or region as the people supporting them, except in extenuating circumstances. Relationships between parties are also considered. Parent-child relationships are most likely to meet a support test, whether a parent is supporting a child in college or a child is supporting an older parent after retirement.
There are worksheets people can fill out to take the support test and determine whether they are allowed to claim someone as a dependent. Providing more than half of a child's financial support while the child is in college is a classic example of a situation where someone can be claimed as a dependent. While being claimed as dependents, people are not allowed to claim themselves on their taxes. Attempts by both parent and child to claim independently can result in legal penalties if the activity is deliberately fraudulent.
Being able to claim a dependent exemption reduces tax liability and may entitle people to special tax credits and other tax benefits. Clear standards like the support test are used to remove ambiguity from such claims, making it easy for people to see if they qualify. The guidelines may change periodically, making it important to fill out the associated paperwork each year to confirm that someone is still considered, for financial purposes, a dependent.
Being a financial dependent does not mean that someone is subject to control or authority from another person. Adult children in college are generally deemed to be legally independent, able to take responsibility for their own actions, sign contracts, and engage in other legal agreements. Likewise, older adults being supported by their families financial are still autonomous and allowed to make decisions for themselves.