Many of us know families in trouble financially, or have one or more family members hurting. My local paper has been full of stories this week on the approximate 1500 high school students in the area who are homeless, and yet still hanging in there, going to school and working for something more. I was encouraged to read a new Tax Court case this morning about a homeowner who took in her sister and children after they lost their home, and got some tax breaks for her actions.
In this case, the Tax Court decided that the taxpayer could claim her sister’s two children as dependents. They had lived with her for more than six months, were both under the age of 19, and, by providing food and shelter, the taxpayer had provided more than half of their support.
The Tax Court went on to provide the homeowner with additional benefits too: the earned income credit, child tax credit and head of household filing status. All of these things added up to a significant tax break for the homeowner.
My guess is the homeowner would have taken in her sister and the children in any event, but at a time when it feels like all the news is bad, this story made a nice bright spot in my day. If you’ve found yourself in a similar situation this year, helping out family, then you may be eligible for one or more of these tax deductions yourself.