A friend has a convoluted personal life. One wife in a distant city for many years. She developed severe emotional problems but they have not divorced. He pays her expenses in conjunction with a bank, acting as guardians, for lack of a better term. She isn't in a hospital, but has some kind of help and some friends. She never questions why she doesn't sees or hears from her husband, but does leave incomprehensible (he says) voice messages for him.
He files a joint tax return. He manages their combined funds, which are substantial. He also has had a live in girlfriend for years, who he pays at least the majority, if not all, the expenses for, since she does not work. I don't know if she files a tax return of her own, has some independent income, or any further details yet.
I asked him if he couldn't deduct her as a dependent on his taxes and he thought he couldn't because she wasn't related, but as I read what's online, you don't have to be related in order to be a dependent, provided certain other qualifications are met, which I think she meets.
Am I going off in some crazy direction with this idea or not?
years. She developed severe emotional problems but they have not divorced.
Correction. He and his wife file a joint return.
live in girlfriend for years, who he pays at least the majority, if not all, the expenses for, since she does not work. I don't know if she files a tax return of her own, has some independent income, or any further details yet. I asked him if he couldn't deduct her as a dependent on his taxes and he thought he couldn't because she wasn't related, but as I read what's online, you don't have to be related in order to be a dependent, provided certain other qualifications are met, which I think she meets.
If they live together for the entire year they don't have to be related by blood or law. See Pub 501.
He might want to think about his wife's reaction when she sees this on the tax return he sends her to sign.
years. She developed severe emotional problems but they have not divorced. He pays her expenses in conjunction with a bank, acting as guardians, for lack of a better term. She isn't in a hospital, but has some kind of help and some friends. She never questions why she doesn't sees or hears from her husband, but does leave incomprehensible (he says) voice messages for him. He files a joint tax return. He manages their combined funds, which are substantial. He also has had a live in girlfriend for years, who he pays at least the majority, if not all, the expenses for, since she does not work. I don't know if she files a tax return of her own, has some independent income, or any further details yet. I asked him if he couldn't deduct her as a dependent on his taxes and he thought he couldn't because she wasn't related, but as I read what's online, you don't have to be related in order to be a dependent, provided certain other qualifica tions are met, which I think she meets. Am I going off in some crazy direction with this idea or not? -- > > > > > > > > > >
I humbly accept your corrections :) I was trying to be precise but clearly wasn't. Yes, he and wife file a joint return, but she never sees it for signature. There is some arrangement with the bank or whomever is participating in her overseeing her financial life by which he is able do the joint return by himself. He told me how it works but I can't find the email that explained it. There is only one wife involved.
He lives in Massachusetts, wife in Washington D.c. I don't know the precise figures for their income (generated by him), but at one point he mentioned being concerned that he might be owing 90K of tax this year, so that should give you an idea of the current income. It is almost entirely from the stock market. He does a lot of options trading. Some other entrepreneurial ventures are in the works, but I don't think he's on anyone's payroll.
He did tell me today that there is a income cap after which you can't classify someone as a dependent, something around $3800. He says his live in girlfriend has income that exceeds this amount, although he only mentioned Social Security (these are people close to 70-- all of them). I read somewhere online that SS isn't counted in the determination, but I certainly could be wrong and/or she could have income other than that that I'm not aware of.
I got interested in this out of curiousity, but it sounds like it probably is a dead end. Thanks for commenting despite the vagueness of the situation.
He files a joint tax return. He manages their combined funds, which are substantial. He also has had a live in girlfriend for years, who he pays at least the majority, if not all, the expenses for, since she does not work. I don't know if she files a tax return of her own, has some independent income, or any further details yet.
I asked him if he couldn't deduct her as a dependent on his taxes and he thought he couldn't because she wasn't related, but as I read what's online, you don't have to be related in order to be a dependent, provided certain other qualifications are met, which I think she meets.
Am I going off in some crazy direction with this idea or not? ============================ In general, a spouse CANNOT be a dependent.
The only time when a spouse can be a dependent of the other spouse on a form
1040 is when:
1) They both file separate returns, and
2) The exemption for the dependent spouse has no effect on his/her own tax return. Of course, all the other rules for claiming a dependent must apply as well.
On a form 1040-NR, aliens from only 4 countries qualify to claim a dependent spouse: Canada, Japan, South Korea, and Mexico. Two of those are by statute and the other two by tax treaty.
As for the girlfriend, it is possible to claim her as a dependent as a "member of the household" for all 365 days in the tax year, assuming all the rules other than relationship apply.
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