Claiming Adult Children

• If your adult son suffers from a permanent and total disability that precludes him from engaging in any substantial gainful activity, such as employment or school, you can continue to claim him as your dependent, regardless of his age, until the tax year he no longer suffers from the disability. Moreover, a doctor must expect the disability to last continuously for one year or potentially result in death. Additionally, your son must not provide more than half of his own financial support and must reside with you for more than half the tax year to claim his exemption. Any year you claim his exemption, your son cannot also claim the exemption on his own tax return.
  
  

Dependent Filing Thresholds

• The ordinary filing rules that apply to taxpayers who aren’t dependents require the filing of a tax return when their gross income is equal to or greater than the sum of one personal exemption and the standard deduction they can claim for the filing status they use. However, since dependents are unable to claim an exemption, they must file a tax return when their earned gross income exceeds the standard deduction available to single filers or their unearned income exceeds $950.
  
  

Disability Benefits

• Identify how the IRS treats your son’s disability income before evaluating whether he must file a tax return. If he receives supplemental security income (SSI) as a result of his disability, all payments he receives are exempt from tax, and you don’t include them in his gross income when evaluating whether he must file a tax return. However, if he receives disability payments from a prior employer’s insurance plan, those benefits are taxable to the extent that your son’s employer pays the premiums for the disability insurance plan.
  
  

Earned or Unearned Income

• Your son’s earned income only includes payments he receives in exchange for providing services, such as through employment. However, if he suffers from a permanent and total disability and receives taxable disability income, the IRS treats it as earned despite the fact that he doesn’t currently provide services for it. In contrast, his unearned income, which is subject to the lower filing threshold, includes all other forms of income he receives. Typically, this includes dividend and interest earnings from his stock and bond investments and rental income he receives from rental properties he owns.