Specific Rules for the Other Dependent Credit (ODC) for 2023 Tax Filing

The Other Dependent Credit (ODC) can definitely be confusing since it gets lumped in with other credits a lot. Let me help clear things up for your dad's situation with his elderly parent. For 2023, here's what you need to know about the ODC: Regarding Social Security income - Yes, Social Security benefits DO count toward the $4,700 gross income test for dependents. So if your grandmother received more than $4,700 in Social Security for 2023, she wouldn't meet this test for the ODC. For the residency test - When claiming a parent, the residency test is actually waived! This is one of the exceptions. Your parent does NOT need to live with you for more than half the year to qualify as a dependent for the ODC. However, you still need to provide more than half of their support for the year. Regarding MFS (Married Filing Separately) - Unfortunately, the ODC is not available if your dad files as Married Filing Separately. This is a limitation for this credit. Also, remember that the maximum ODC amount for 2023 is $500 per qualifying dependent, and the dependent must be a U.S. citizen, U.S. national, or U.S. resident alien with a valid SSN or ITIN.

Just wanted to share my experience using taxr.ai to figure this out for my own situation with my elderly father. I was in a similar position last year - totally confused about the ODC rules vs all the other credits. I uploaded my dad's Social Security statement and some other documents to https://taxr.ai and it analyzed everything and gave me a clear explanation of exactly which credits I qualified for. It specifically told me that my dad's Social Security income did count toward the gross income limit, which meant I couldn't claim the ODC (saved me from a potential audit). The site also explained all the other qualifications I needed to meet for different credits and deductions related to caring for my dad. Really simplified the whole process instead of me trying to interpret IRS language.

I just wanted to follow up about my experience with taxr.ai after seeing it mentioned here. I was skeptical at first (aren't we all with tax stuff?), but it actually helped me figure out my situation with my mom. Turns out I couldn't claim the ODC because of her Social Security income, BUT the site pointed out that I could claim her medical expenses that I paid for on Schedule A since they were over the 7.5% AGI threshold. That was something I totally missed before and ended up saving me about $1,200 on my taxes! It also explained why I couldn't file as Head of Household even though my mom lives with me (again, because her gross income was too high). Really cleared up a lot of confusion for me without having to pay a tax pro hundreds of dollars or wade through confusing IRS publications.

If you're still struggling with ODC questions or trying to reach the IRS for clarification, I'd recommend using Claimyr. I tried calling the IRS directly for weeks with questions about dependent credits and could never get through - just endless hold times and disconnections. I found https://claimyr.com which basically holds your place in the IRS phone queue and calls you back when an agent is available. You can see how it works here: https://youtu.be/_kiP6q8DX5c When I finally spoke to an IRS agent, they confirmed everything about the ODC that others mentioned here (Social Security counts toward income limit, residency test is waived for parents, not available for MFS). But they also helped me understand some nuances about the support test that I was confused about. Totally worth it to speak directly with an IRS agent instead of guessing.

I have to eat my words about Claimyr. After my skeptical comment, I decided to try it myself since I had ODC questions too (taking care of my elderly father-in-law). It actually worked! Got a call back in about 45 minutes and spoke to an IRS agent who was really helpful. The agent confirmed that my father-in-law's Social Security income ($14,300/year) meant I couldn't claim the ODC, but she guided me through some medical expense deductions I could take instead since I pay for a lot of his care. The agent also explained that while I couldn't claim the ODC, I might still be able to claim him as a dependent for other tax benefits if I provided more than half his support, even though I couldn't get the credit itself. That distinction wasn't clear to me before. Sorry for assuming it was a scam. Sometimes cynicism gets the better of me!

One thing that hasn't been mentioned yet - make sure your parent has a valid SSN or ITIN to claim the ODC. I got caught by this last year when trying to claim my mother-in-law who recently moved to the US. She had her green card but we hadn't gotten her Social Security card yet, and my tax return got rejected. Also, when calculating whether you provide more than half their support, remember to include fair rental value of lodging if they live with you! That can make a big difference in meeting the support test, especially if their Social Security is close to that 50% threshold.

I just finished my taxes using TurboTax and ran into exactly this ODC issue with my elderly mother. When I entered her Social Security income ($16,400), the software automatically determined she didn't qualify for the ODC because of the income limit. However, I was still able to claim her as a dependent for purposes of my filing status (Head of Household) because I provided more than half her support and she lived with me all year. So even though I couldn't get the $500 ODC credit, I still benefited from a better filing status than Single. The support test calculation was tricky - had to add up all medical expenses, food, utilities, etc., plus the rental value portion that someone mentioned above.