So Dweezilh as been working a lot of hours at the grocery store this past year. I had a mental image of what his earnings were, but tonight I got him to give me his W2 so I can start sorting out the family tax situation, and it was about 50% more than I had thought. Still under the Federal poverty guidelines - but not by as much as I’d thought.
Now, of course, my first thought is “can I borrow some money?” because hell, he doesn’t have a mortgage and isn’t (yet) supporting his aging parents like we are, so he’s got more ready cash than I do.
My second thought is figuring out whether we can still claim him as a dependent. Arguably we provide half his support if you figure in the cost of housing and health insurance, and of course virtually all his food (admittedly with the benefit of his employee discount at the store!).
How would you go about valuing all that for tax purposes? I could probably get good numbers for how much extra the health insurance costs to cover him, and could get the auto insurance to say how much extra it costs to have him covered (it’s over a thousand a year, for sure).
But the cost of housing is more nebulous - I suppose we could say 25% of the mortgage payment covers his part of the house, so value that as providing housing, ditto utilities, ditto groceries. Or I could assume housing equivalent to the low rate we’re charging a friend who’s renting the basement (I think we’re charging her below-market rates but haven’t looked at “roommate wanted” to figure that out).
It’s obviously more beneficial to us to have him as a dependent - if the personal deduction is 4,000 dollars and we take it at our higher tax bracket, that’s more than his deduction would be at his lower bracket.