Hey “Sugar Mommas” & “Sugar Daddies: “Don’t Miss Out on This!

The qualifications required to claim federal tax exemptions can be confusing, especially for Americans who financially supported their significant other in 2012. To help taxpayers in this predicament, personal finance resource, www.GoBankingRates.com, investigates the IRS rules surrounding dependents and explains how certain unmarried couples can claim a $3,800 federal tax exemption this year.

A common misconception regarding federal tax exemptions is that taxpayers are only permitted to claim children or biological relatives on tax returns. However, the latest report from GoBankingRates reveals it’s possible to claim a boyfriend or girlfriend as a dependent on tax returns if they successfully meet four qualifying relative test requirements, resulting in a $3,800 exemption.

The four qualifying relative tests for claiming a significant other as a tax dependent for federal tax exemptions include:

1.      The non-qualifying child test

2.      Relationship test

3.      Income test

4.      Support test

Before claiming this federal tax exemption, however, Alison Flores of The Tax Institute at H&R Block reminds those who qualify for the exemption how to back up their claim:

“If you claim a deduction for a dependent, you should keep documents on hand to support your deduction. Documentation includes … records that show you had the same address or addresses, canceled checks or receipts for household expenses (such as food, utilities, and rent) and canceled checks or receipts for your dependent’s expenses (such as clothing, education, out-of-pocket medical, and recreation).”

In addition to the tests outlined above, two final conditions must be met to claim a boyfriend or girlfriend as a dependent.

To read the details, click here.

About Go Banking Rates

GoBankingRates.com is a national website dedicated to connecting readers with the best interest rates on financial services nationwide, as well as informative personal finance content, news and tools. Go Banking Rates collects interest rate information from more than 4,000 U.S. banks and credit unions, making it the only online rates aggregator with the ability to provide the most comprehensive and authentic local interest rate information.

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