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If she has a doctors diagnosis stating that she suffers from a mental condition which disables her ability to function, she does qualify as your dependent, not as a daughter but as a qualifying person. The next step is to be sure you are providing more than 1/2 her support and get the written diagnosis. You will be able to receive tax benefits and get her the insurance coverage she needs. Here is some information from the IRS about this. It contains one or more links to other pages which you may find useful. As an additional point, you may be able to also get her financial assistance so she can start an internet business and work from home. Check with local Social Service agencies on that.
IRS Tax Tip 2011-07 January 11, 2011
Some tax rules affect every person who may have to file a federal income tax return - these rules include dependents and exemptions. Here are six important facts the IRS wants you to know about dependents and exemptions that will help you file your 2010 tax return.
For more information on exemptions, dependents and whether you or your dependent needs to file a tax return, see IRS Publication 501. The publication is available at http://www.irs.gov or can be ordered by calling 800-TAX-FORM(NNN) NNN-NNNN. You can also use the Interactive Tax Assistant at http://www.irs.gov to determine who you can claim as a dependent and how much you can deduct for each exemption you claim. The ITA tool is a tax law resource on the IRS website that takes you through a series of questions and provides you with responses to tax law questions.
IRS Publication 501, Exemptions, Standard Deduction, and Filing Information
This is a fine distinction I know, but it can make a huge difference on your taxes. In most cases the IRS requires that the state recoginize
The above expert was correct in that you need some sort of proof that your daughter is disabled, and in many cases that means that your child is collecting Social Security Disability, although as the expert mentioned above, a doctor's note stating that your daughter is disabled is also sufficient.
Since you may claim your daughter under the Qualifying Child rules, this means that you may possibly claim the Earned Income Credit if your Adjusted Gross Income meets the requirements. Please see below:
Tax Topics - Topic 601 Earned Income Credit
Also, you mentioned that due to your daughter's condition, she may not leave the house. As your qualifying child, you may claim The Child Care expenses you pay out pocket for any one who comes in to stay with your daughter while you can't . Please see page 1 from below:
2011 Instruction 2441
One last item. The rules re: support for qualifying children changed a little while back. While it used to be that you had to provide at least 51% of their support in order to claim them, now you may claim your child as along as the CHILD does not provide more than 51% of their own support. Please see below:
Support Test (To Be a Qualifying Child)
I hope this helps.
Anne and Charles,
Thank you so much for your answers. When you stated that we would need a Doctors diagnosis, does that mean a Psychiatrist, Psychologist or her family Doctor. Also in order to get her onto my employers health insurance will this diagnosis/letter from the professional be sufficient for the insurance company to add her on my plan as a dependant? Is there any instance that we would need to get a court to rule her as our dependant? Thank You.