Changing Family Dynamic May Lead To Tax Relief
By CAROLE FELDMAN
WASHINGTON (AP) â¿¿ Members of the sandwich generation â¿¿ caught between supporting elderly parents whose assets are nearly exhausted and adult children without jobs â¿¿ might find some relief come tax time.
The bottom line is, who's a dependent? Your kindergarten-age son, your adult daughter, her grandparents, or maybe an elderly uncle or aunt?
"There's a changing family dynamic because of the economy," said Bob Meighan, vice president of TurboTax, an online tax preparation service.More people are living longer. According to the U.S. Census Bureau, the number of older Americans increased by 9.7 percent from 2000 to 2010, when there were about 40 million people age 65 or older. A longer lifespan puts added strain on retirement accounts, which have already taken a hit in the roller-coaster economy. As a result, many baby boomers find themselves supporting their elderly parents, in some cases footing the bill for assisted living or nursing home care. Meanwhile, the unemployment rate for adults age 20 to 24 was 13.7 percent in December, considerably higher than the overall rate of 7.8 percent. Unable to find work, many young adults are returning home â¿¿ or never leaving, relying on Mom and Dad for food, lodging and more. What does this mean for taxes? "A lot of filers are going to have to pay particular attention," Meighan said. More people may rely on tax software to help get them through the dependency issue. Depending on individual circumstances, taxpayers may be able to claim both their parents and their children as dependents. "The rules are very pro-taxpayer," said Mark Steber, chief tax officer at Jackson-Hewitt Tax Services. If you are taking care of someone and the IRS defines that clearly â¿¿ age, income, residency tests and support â¿¿ you should be able to claim the exemption, he says.
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