Question: Our mother’s lengthy illness and death caused emotional and economic devastation to our father, now 84. Because of his poor financial situation (his only income is Social Security of less than $875 per month), my brother, two sisters, and I have been providing him money for food, clothing, gasoline, car and house maintenance, and other such expenses. We have been talking about taking him as a dependent; however, since none of us provides more than half of his support, how can we take advantage of this tax break?

Answer: While it is generally correct that a taxpayer can claim a dependency exemption for an individual only if he or she provides more than half of that individual's support during the year, in multiple support situations such as yours, several taxpayers may provide support for an individual with no one of them providing more than half the support.

In these circumstances, the general rule has an exception: If qualified taxpayers each provide more than 10% of an individual’s support – and provide 50% collectively among them -- they can decide among themselves who will claim the exemption so long as all tests are met. “Support” can include expenditures for clothing, food, housing, transportation, vacations, medical and dental care, and other necessities. Although only one taxpayer can claim the exemption each year, the exemption can be switched from sibling to sibling on a year-to-year basis. Those of you who are eligible to claim the exemption must enter into a new agreement each year in order for one of you to claim the exemption.

So long as your father or, for that matter, any other relative, is a citizen of the United States, he need not live with you in order for him to qualify as your dependent. However, other relatives must live with you in order for you to claim the dependency exemption. You cannot claim the exemption if your father files a joint return with anyone.

So, the first thing to do is determine which of you should claim the exemption in which year and establish the rotation. But remember, if one of you does not provide 10% of the total support for your father, that sibling will not be eligible to claim the exemption.

Once you decide who will take the exemption, each of the other siblings who have provided at least 10% of your father’s support must complete and sign a Form 2120, which will be attached to the tax return of the person who claims the exemption.

It is important to remember that in multiple support situations, the taxpayer claiming the dependency exemption can also deduct medical expenses that he/she pays for the person being claimed as a dependent. If you pay more than half of your parent's support, you may also be eligible to deduct medical expenses paid on Dad’s behalf, even if Dad earns too much for you to be able to claim a dependency exemption. In these situations, you would merely add your parent's medical expenses – such as health insurance premiums -- to your medical expenses and deduct them to the extent that they exceed 7.5 percent of your adjusted gross income.

We urge you to contact your certified public accountant or tax advisor to help you determine exactly where you stand.