"Boomerang" children are grown children who moved away from home but later move back in with their parents because they can't afford to support themselves. Because of the recession and high unemployment among young people, boomerang children are a rapidly growing phenomenon.
You may or may not be happy to have your child move back in with you, but at least a boomerang kid can help reduce your tax burden.
If a boomerang child qualifies as your dependent for tax purposes, you'll be able to claim a dependent exemption for him or her. For 2014, the dependent exemption is $3,950. This means that your total tax bill is reduced by $3,950 for each dependent exemption.
There are two ways a boomerang child can qualify as your dependent--as a qualifying child or a qualifying relative:
Your child will be a "qualifying child" for dependent exemption purposes if he or she:
Note that it doesn't matter how much income a qualifying child has as long as the income doesn't provide over half of the child's own support.
A boomerang child who does not meet the test to be your qualifying child--for example, because he or she is too old--can still be your qualifying relative, which lets you claim a dependent exemption for the child. This is the only way a child 24 or older can qualify as your dependent, unless he or she is totally disabled. A child of any age can be a qualifying relative if the following support and gross income tests are met.
To be your qualifying relative, your child must pass two tests:
You may be entitled to other tax benefits for expenses you pay for a boomerang child, depending on your situation. These may include:
If you hire your child to work as a legitimate employee in your business, you'll be able to deduct the salary and any other benefits you provide to him or her, including health insurance.