Qualifying relative?

My wife's aunt has lived with us since mid-2006. A qualifying relative must earn less than $3,400 in 2007 and I must provide more than half of her support during the year.

My question is, what qualifies as support? She lives with us and does not pay rent/food/utilities. She pays her own insurances, cell phone, gas, etc. She is separated from her husband and he gives her half of his disabilty check and we pay her to watch our daughter while we work, but she does not pay any taxes.

Do I get to claim her as a dependant?

Dingo,

Hope this helps:

Support Test (To Be a Qualifying Relative)

To meet this test, you generally must provide more than half of a person's total support during the calendar year.

However, if two or more persons provide support, but no one person provides more than half of a person's total support, see Multiple Support Agreement, later.

How to determine if support test is met. You figure whether you have provided more than half of a person's total support by comparing the amount you contributed to that person's support with the entire amount of support that person received from all sources. This includes support the person provided from his or her own funds.

You may find Worksheet 1 helpful in figuring whether you provided more than half of a person's support.


Person's own funds not used for support. A person's own funds are not support unless they are actually spent for support.

Example.

Your mother received $2,400 in social security benefits and $300 in interest. She paid $2,000 for lodging and $400 for recreation. She put $300 in a savings account.

Even though your mother received a total of $2,700 ($2,400 + $300), she spent only $2,400 ($2,000 + $400) for her own support. If you spent more than $2,400 for her support and no other support was received, you have provided more than half of her support.

http://www.irs.gov/publications/p501/ar02.html#d0e3763

Said qualifying relative will not be claimed on my 2007 taxes, because it might flag her as not living at her old residence, where she tells her free clinic she still lives...

Give me a break.

Ouch. Sorry to hear that.

I would love to find out that claiming her would result in a zero percent chance of them finding out. The IRS rep. I spoke with said that they do not actively provide that information to interested parties, but we were/are afraid the clinic could audit her SSN and somehow discover that she is truly living with us.

Again, we are talking about my saving several hundreds of dollars vs. her potentially losing tens of thousands of (albeit ethically and morally questionable) dollars.

"A bird in the hand...."

Out of curiosity, I called that county's health department and asked how they verify individuals' addresses. The girl (I think it was a receptionist) paused and said, "We have their addresses on file."
:confused:
Wow.

A qualifying relative does not need to be living with the taxpayer...

Her concern is that the county health clinic (she does not truly live in that county, but instead with us) will find out she is living with us if we add her SSN to our 2007 tax return. If that happens, she will lose those benefits.

My wife is concerned as well, therefore making me concerned (by default).

I realize the reason the IRS allows taxpayers to claim qualifying relatives is to offset costs incurred throughout the year, which cheeses me off, since I am getting the raw end of both deals.

To top it off, we pay her daily to babysit our daughter. On top of the qualifying relative fiasco, I can't claim the childcare, or else she would have to pay taxes.

Anybody have any Rolaids?