Case Study - Support Test for a Dependent

Troy Smith owns a home in which he lives with his wife, two children, and his mother, Blanche. Blanche is a U.S. citizen and receives annual pension benefits of $3,000, of which $1,800 is taxable gross income. She spends her entire pension on clothing, recreation, and other support items.

Troy's total food expenses for the household were $5,000. He also paid his mother's medical expenses, amounting to $4,000. The fair rental value of the room furnished to Blanche, based on the cost of comparable rooming facilities, was $2,400 per year.

Blanche's total support is computed as follows:

$ 2,400

Direct expenses paid by Blanche:	3,000
Medical expenses paid by Troy:	4,000
Blanche's share of food expenses:	1,000
Total support:	$10,400

Because Troy furnished support worth $7,400, he paid more than one-half of Blanche's support and can claim her as a dependent.

If we change the facts slightly to provide Blanche with nontaxable Social Security benefits of $8,000 in addition to her $3,000 pension, she would remain Troy's dependent as long as she spent less than Troy did ($7,400) on her own support. The remainder of her pension and benefits could be saved or invested, perhaps with the idea that upon her death the savings would go to Troy's children.