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Tax Deduction for Sending Money to a Prisoner?

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Reader-submitted question:

Can I take a tax deduction for the money I send to my son in prison and money I spend on clothing?

Dear Reader,

You cannot take a tax deduction for money sent to your son in prison -- or sent to anyone else, for that matter. Money, food, clothing, toys, and other items sent to a person is considered a gift, and gifts are not tax deductible. (The only exception to this is when you give money or other items to a qualified charity. Charitable donations can be included as an itemized deduction on Form 1040 Schedule A.) The short answer to your question is No.

However, if your son lived with you for more than half the year and if your son did not provide more than half of his own financial support, then you may be eligible to claim your son as a dependent under the qualified children rules. You can demonstrate that you provided most of your son's support if (1) your son lived with you for more than half the year, and (2) you can show that your son did not provide more than half of his own support. You did not say how long your son has been in prison. So let me provide an example.

Angela, a single parent, has two children, Barbara and Charles. Both children live with her. Charles gets in trouble with the law and goes to jail in July. Charles stays in prison the rest of the year. Based on this scenario, Angela may be entitled to claim both her children as dependents on her tax return. One of the crucial tests for claiming a dependent is that the dependents cannot provide more than half of their own financial support. Angela can prove that both children lived with her for more than half the year. Angela can also prove the neither child provided more than half of their own support. In the case of the son in prison, he is clearly not earning an income and providing his own support.

While this specific situation (an incarcerated dependent) is not mentioned in the tax law or IRS instructions, I based the scenario above on a Tax Court case from 2002 (T.C. Memo 2002-258 [PDF]). The issue in that case was whether the parent could claim her son as a dependent and as a qualifying child for the earned income credit even though her son was in prison all year. The Tax Court reasoned that since the parent did not provide more than half of the child's support, the parent could not claim the son as a dependent. Furthermore, since the son did not live with his mom for more than 6 months of the year, the mom could not claim her son for earned income credit purposes. However, the definition of a dependent has changed since the Tax Court issued its decision in 2002. Under the new rules, it may be easier for an incarcerated child to be claimed as a dependent, since the new law provides that dependents cannot provide more than half of their own support.

It should be noted that other child-related tax benefits such as the head of household filing status, the earned income credit, and the child tax credit have different eligibility criteria. The Head of Household status, for example, requires that a taxpayer must provide more than half of the dependent's financial support; and this might not be the case if the child is incarcerated.

For more information on claiming a dependent, you should read "Personal Exemptions and Dependents," (Chapter 3 of IRS Publication 17) for all the details about the criteria for claiming a dependent.

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