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Inheritance doesn’t have to count as support

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in Small Business Tax

Q. Our 21-year-old son received a $45,000 inheritance from his grandmother in 2009. Can we still claim him as our dependent? J.B.T., Buffalo, N.Y.

A. Yes, as long as you meet all the tax-law requirements. The amount of any inheritances or gifts received doesn’t matter; it’s how much your son spent on his own support that counts.

For instance, say he used $10,000 to buy a car and banked the rest, and you still provided more than half of his annual support. You can claim the dependency exemption for the 21-year-old as long as he is a full-time student during at least five months of the year. In contrast, if your son uses some or all of the gift to provide over half of his own support, you can’t claim him as your dependent.

Tip:
Any amount your child banks or invests isn’t treated as support.

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