An article on cnn.com entitled “My girlfriend is a tax break” recently caught my eye. “My girlfriend is a tax break,” by Blake Ellis, money.cnn.com, April 10, 2014. Nearly everyone is aware that children qualify as dependents on a parent’s tax return, qualifying those parents for a tax break. However, girlfriends and boyfriends can also qualify as dependents, so long as certain requirements are met.
First, the significant other must live with you. Expect to provide proof of the cohabitation such as both names on a lease, or mail addressed to that person at the joint address. Second, he/she must earn less than $3,900 per year. This is an extremely low annual income. The person basically has to be unemployed or working very few hours. Third, you must pay for more than half of their expenses. Again, expect to provide proof that you are paying all or nearly all of the household and other expenses including mortgage/rent, utilities, groceries, etc. Fourth, someone else must not claim them as a dependent. If the above criteria are met, claiming your significant other as a dependent will give you a tax exemption of up to $3,900. It should be noted that this tax exemption is not meant for the extremely rich. If you earn more than $250,000 per year, the exemption begins to phase out.
The tax experts quoted in the article point out that use of this exemption is very rare because it is extremely difficult to qualify for. One expert stated that she prepares around 300 tax returns per year and that only one or two qualify to claim a significant other as a dependent. It is mainly used by couples in which one party stays home with the kids either by choice or due to the inability to find a job.
NOTE: The writers of this blog are NOT tax experts and are not qualified to give tax advice. If you think you may qualify for this exemption, please contact your tax advisor.