haha, there are a lot more funny stuff in P501, I am pretty surprised how
people calculate money between themselves and their parents and children.
And now I know how useless my accountant is. I definitely will fire her and
find another "good" one. lol.
Example 1.
You buy a $200 power lawn mower for your 13-year-old child. The child is
given the duty of keeping the lawn trimmed. Because the lawn mower benefits
all members of the household, do not include the cost of the lawn mower in
the support of your child.
Example 2.
You buy a $150 television set as a birthday present for your 12-year-old
child. The television set is placed in your child's bedroom. You can include
the cost of the television set in the support of your child.
Example 2.
Your parents live with you, your spouse, and your two children in a house
you own. The fair rental value of your parents' share of the lodging is $2,
000 a year ($1,000 each), which includes furnishings and utilities. Your
father receives a nontaxable pension of $4,200, which he spends equally
between your mother and himself for items of support such as clothing,
transportation, and recreation. Your total food expense for the household is
$6,000. Your heat and utility bills amount to $1,200. Your mother has
hospital and medical expenses of $600, which you pay during the year. Figure
your parents' total support as follows:
Example 3
Support provided Father Mother
Fair rental value of lodging $1,000 $1,000
Pension spent for their support 2,100 2,100
Share of food (1/6 of $6,000) 1,000 1,000
Medical expenses for mother 600
Parents' total support $4,100 $4,700
You must apply the support test separately to each parent. You provide $2,
000 ($1,000 lodging + $1,000 food) of your father's total support of $4,100
— less than half. You provide $2,600 to your mother ($1,000 lodging + $1,
000 food + $600 medical) — more than half of her total support of $4,700.
You meet the support test for your mother, but not your father. Heat and
utility costs are included in the fair rental value of the lodging, so these
are not considered separately.