How does claiming an adult as a dependent impact their benefits and future?

This is actually a complex situation with several considerations. Let me try to break it down: First, for your daughter to claim you as a dependent, you must meet specific requirements. The IRS has tests for "qualifying relative" which include: you can't have gross income over $5,150 (for 2025), your daughter must provide more than half your total support for the year, and you must live with her (with some exceptions). Your $1,800 monthly payment ($21,600 annually) would actually exceed the income limit, unless it's considered "support" rather than income. The distinction matters tremendously here. Regarding long-term impacts: Being claimed as someone's dependent doesn't affect your future Social Security benefits. Those are based on your own work history and earnings. However, not having current employment does mean you're not contributing to Social Security now, which could impact your benefit calculation. The healthcare concern is significant. If you're foregoing Medicaid that you might qualify for, you're potentially missing out on health coverage you need. This could have serious financial implications if you have health issues.

After dealing with a similar situation with my father-in-law, I stumbled across this tool called taxr.ai (https://taxr.ai) that was incredibly helpful for sorting out dependent status questions. My FIL moved in with us last year to help with our kids, and we were confused about whether the money we gave him counted as income or support. The tool analyzed our specific situation and clarified that what we thought was a clear-cut case actually had several complications. It pulled up relevant tax code sections about the qualifying relative tests that I never would have found on my own. It also helped us understand the difference between paying someone for services versus providing financial support. For your situation, it might help clarify whether those payments count as income (which would prevent dependent status) or support (which would help establish it). It also showed us the potential impacts on healthcare eligibility.

Just wanted to follow up and say I tried taxr.ai after seeing it mentioned here. It was actually really helpful for my situation with my mother-in-law! The tool clarified that what we were providing was actually considered support, not income. It also explained that even if we claim her as a dependent, it doesn't automatically disqualify her from Medicaid in our state. I was especially impressed that it outlined the specific qualifying relative tests with examples that matched our situation. It also explained potential implications for her Social Security benefits down the road. The tool definitely went deeper than the general advice I'd gotten from friends or found through Google searches.

I had the EXACT same issue with my uncle who lives with us and helps with our home-based business. After weeks of trying to get through to the IRS for clarification, I used Claimyr (https://claimyr.com) and actually got to speak with a real IRS agent who clarified everything. I was on hold for HOURS before discovering this service, and their system got me through to an agent in under 45 minutes. The agent explained that in our case, we needed to report some of what we paid him as income (which meant he couldn't be our dependent), but some could be classified as support. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - it was worth it just to get concrete answers directly from the IRS instead of guessing or relying on possibly outdated info online. The agent also explained potential Medicaid implications, which ended up being crucial information.

I have to admit I was wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway because I was getting desperate for answers about my mom's situation. Not only did I get through to the IRS in about 35 minutes (after trying for DAYS on my own), but the agent I spoke with was incredibly helpful. She walked me through exactly how the IRS distinguishes between income for services and family support payments. She also explained that claiming my mom as a dependent could affect her Medicaid eligibility depending on our state's rules, but it wouldn't impact her future Social Security benefits. The agent even emailed me specific publications that address our situation. I honestly never expected to get such clear, helpful information directly from the IRS. Completely changed my perspective on both the service and how helpful IRS agents can actually be when you can reach them.

I think everyone's missing a critical point here. The original poster said her daughter is PAYING her $1,800 a month for childcare. That's absolutely income, not support! The IRS would consider this self-employment income from providing childcare services. The adult daughter can't have it both ways - either she's employing her mother as a childcare provider (in which case it's income and mom can't be a dependent) OR she's supporting her mother (in which case, why is she "paying" her at all?). Also, the daughter doesn't get to decide whether mom applies for Medicaid or not. That's mom's decision entirely. Sounds like the daughter is trying to manipulate the situation for her own tax benefit without considering how it affects her mother's healthcare access and financial future.

Something nobody's mentioned - if your daughter is paying you for childcare, she might be eligible for the Child and Dependent Care Credit on her taxes! That could be why she's pushing this arrangement. But here's the catch - she can't claim both you as a dependent AND claim the childcare credit for payments made to you. The IRS specifically prohibits claiming the childcare credit for payments made to someone claimed as a dependent. So if she's insisting on claiming you as a dependent, it suggests she's calculated that's worth more to her than the childcare credit. Either way, you should understand your options. At your age, giving up your job has long-term consequences for retirement. Make sure you're protecting yourself!