Do You Know Who You Can Claim as a Dependent?

I was asked this scenario- I have a disabled friend who lives with me, receives social security benefits, but I support her. Can I claim her as a dependent?

The first part you need to look at is the Relationship Test: (It's more than just a child)
-Lineal Ascendents (ex. parents, grandparents)
-Collateral Ascendents (ex. uncles, aunts)
-Certain In-laws (ex. son-, daughter-, father-, mother-,brother-, and sister-inlaw)
**The relationship test also includes unrelated parties who live with the taxpayer (ex. members of the household). This is not available if your relationship with the taxpayer violates local law (if you know what I mean) or anyone who was a spouse during any part of that year.
*Note that not all relatives apply- if you notice the cousin grouping is not there

The second part is they can't make more than the exemption amount, $3,650 for 2010 (income from Social Security is not counted as part of this total.) Meaning taxable income.

The third part is over one-half of their support must be furnished by the taxpayer in other words they need to receive half of their income from you. Supprt includes food, shelter, clothing, toys, medical, dental, education, and even fair market rent for the room that they stay in.

Another note- if the person does not spend funds that have been received from ANY source, the unexpected amounts are not counted towards the support test. For example, $5,000 was received from working at their local Walmart as a greeter, but all of it was placed in a savings account and has not been touched.

So the answer to the above question would be, yes, as long as half of their income was from you.