Is it no longer possible to claim a dependent and receive a tax exemption?

[jmt111]

NJ

I understand that for the 2017 tax year and earlier, a taxpayer could claim a disabled person as a dependent and receive a tax exemption if the disabled person:

• Receives more than one-half of his/her total support from the taxpayer;
• Is either a US citizen, a resident of the US, Canada, or Mexico for part of the year, a legally adopted foreign child who now resides in the US, or an adopted child living with the taxpayer the entire year in a foreign country;
• Is a relative or a member of the taxpayer’s household for the entire year;
• Does not file a joint return with a spouse; and
• Does not have a gross income of more than $4,050 (with some exceptions).

Is it true that the TCJA has eliminated the dependency tax exemption and, therefore, I cannot receive a tax exemption for a disabled person who lives with me and receives support from me?

I spoke to a tax professional and he seemed to believe that while the dependency exemption was eliminated, it might still be possible to claim a disabled person as a dependent and receive some kind of a tax exemption.

 

[davew9128]

There are no exemptions. If you "tax pro" doesn't understand this, you might want to go see one who signs their name on the return rather than "self-prepared".

 

[Taxing Matters]

Is it true that the TCJA has eliminated the dependency tax exemption and, therefore, I cannot receive a tax exemption for a disabled person who lives with me and receives support from me?

Technically what the tax law provides is that for the years 2018 through 2025 the value of personal & dependent exemptions is zero. So in a practical sense it is true that the dependent exemption is gone. I don't know what that supposed tax pro had in mind with that comment, assuming you are relaying what was said accurately. There was only ever the one dependent exemption, and as the value of that is zero for 2018 there is no other kind of exemption to claim for supporting the disabled person. You might have a medical expense deduction or other deductions related to supporting this person, however. That would depend on the details of the support you provided. If you accurately stated what the tax pro told you, I suggest you may want to look for a different tax pro for advice; that the one you talked doesn't seem to know something basic like exemptions is a concern.

 

[LdiJ]

NJ

I understand that for the 2017 tax year and earlier, a taxpayer could claim a disabled person as a dependent and receive a tax exemption if the disabled person:

• Receives more than one-half of his/her total support from the taxpayer;
• Is either a US citizen, a resident of the US, Canada, or Mexico for part of the year, a legally adopted foreign child who now resides in the US, or an adopted child living with the taxpayer the entire year in a foreign country;
• Is a relative or a member of the taxpayer’s household for the entire year;
• Does not file a joint return with a spouse; and
• Does not have a gross income of more than $4,050 (with some exceptions).

Is it true that the TCJA has eliminated the dependency tax exemption and, therefore, I cannot receive a tax exemption for a disabled person who lives with me and receives support from me?

I spoke to a tax professional and he seemed to believe that while the dependency exemption was eliminated, it might still be possible to claim a disabled person as a dependent and receive some kind of a tax exemption.

Gawd this is such a complicated mess to explain because people just don't get it.

The personal exemptions are gone. Completely GONE. You may not claim a personal exemption for anyone, not even yourself or your spouse.

HOWEVER, there is now a credit for adult dependents, of $500.00. It doesn't entirely replace the personal exemption but it comes close to doing so for some taxpayers.

So no, there are no longer and personal exemptions, however its still beneficial to claim an adult dependent.

 

[FlyingRon]

Ldij is right based on the tax FORM. No exemptions on the return this year. You list the dependents, but all you get is a check box if they would qualify for the Child Tax Credit or (as mentioned above) the "credit for other dependents.". You also don't get an extra exemption for being blind (I never understood why that disability was given special preference) though it may help you qualify for the higher standard deduction.

TM is right based on the tax CODE. Exemptions are still there but the amount they are worth is set to zero under section 151 (d) (5) "Specail rules for taxable years 2018 through 2025."

 

[adjusterjack]

You also don't get an extra exemption for being blind (I never understood why that disability was given special preference) though it may help you qualify for the higher standard deduction.

For a single person, blind or over 65 raises the standard deduction from $12,000 to $13,600. Blind and over 65 raises it to $15,200. There are other amounts for married filing jointly, qualifying widow, married filing separately, and head of the household. There's a worksheet on Page 10 of the 1040 instructions for 2018.

 

[LdiJ]

For a single person, blind or over 65 raises the standard deduction from $12,000 to $13,600. Blind and over 65 raises it to $15,200. There are other amounts for married filing jointly, qualifying widow, married filing separately, and head of the household. There's a worksheet on Page 10 of the 1040 instructions for 2018.

That is correct. Ron just forgot that it was an extra standard deduction rather than an extra exemption.

 

[FlyingRon]

I pretty much said that, it qualifies you for a higher standard deduction. However, it's less than half what the extra exemption would have gotten you in 2017,.

Still, I've never understood why being blind was worth an exemption/deduction but not other disabilities. A working man with quadraplegia is under a greater disability in my opinion. Even depending on what your job is, being deaf may be a greater disability

 

[jmt111]

Technically what the tax law provides is that for the years 2018 through 2025 the value of personal & dependent exemptions is zero. So in a practical sense it is true that the dependent exemption is gone. I don't know what that supposed tax pro had in mind with that comment, assuming you are relaying what was said accurately. There was only ever the one dependent exemption, and as the value of that is zero for 2018 there is no other kind of exemption to claim for supporting the disabled person. You might have a medical expense deduction or other deductions related to supporting this person, however. That would depend on the details of the support you provided. If you accurately stated what the tax pro told you, I suggest you may want to look for a different tax pro for advice; that the one you talked doesn't seem to know something basic like exemptions is a concern.

I walked into Block Advisors and spoke with a tax professional. He said we could get benefits by providing care to an elderly parent, and we might be able to claim a blind person as a dependent if we provide more than half of his support and thereby get a tax exemption. I told him I read that tax exemptions abolished in the new Tax Cuts and Jobs Act in exchange for the near doubling of personal exemptions to $24,000. He said yes, but there are exceptions. He did not sound confident with this latter statement and seemed he was trying to usher me out at that point. I later researched it and found he was perhaps not up to date on changes made in the TCJA of 2017. Or perhaps he was thinking of the new $500 tax credit from 2018 through 2025 for dependents who are not qualifying children if they live with the taxpayer as a member of the household for the year. Perhaps he confused that credit with the exemption for dependents that was in place prior to 2018.

 

[FlyingRon]

He's wrong or you misunderstood him. There are no exceptions as Ldij pointed out earlier, certain non-child dependents can result in a $500 credit, but that is completely different than what exemptions were. Exemptions were reductions in your income before the standard deduction or itemized deductions were applied. This family tax credit is subtracted from what tax you end up owing. There are indeed certain specific requirements for the dependent you wish to use to obtain this credit over and above what is required to make them a dependent.