T.C. Summary Opinion 2011-108

UNITED STATES TAX COURT

ADA R. SANTOS, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 23737-10S. Filed September 12, 2011. 

Ada R. Santos, pro se.

Mark H. Howard, for respondent.

SWIFT, Judge: This case was heard pursuant to the

provisions of section 7463 of the Internal Revenue Code in effect

when the petition was filed.1 Pursuant to section 7463(b), the

decision to be entered is not reviewable by any other court, and 

1All section references are to the Internal Revenue Code in

effect for the year in issue.
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this opinion shall not be treated as precedent for any other

case.

Respondent determined a deficiency of $2,389 in petitioner’s

2009 Federal income tax.

The issues for decision are: (1) Whether petitioner is

entitled to a dependency exemption deduction; (2) whether

petitioner may claim head of household filing status; and (3)

whether petitioner is entitled to an earned income credit of

$3,043. The trial of this case was held on April 4, 2011, in

Salt Lake City, Utah.

Background

Some of the facts have been stipulated and are so found. 

In 2009 petitioner lived in North Salt Lake, Utah, with her

adult son Walter Garcia (Walter). 

In 2009 Walter received $5,430 in Social Security benefits

and some Medicaid benefits from the Utah Department of Health. 

The record does not indicate the amount of Medicaid benefits

Walter received.

During 2009 petitioner made monthly mortgage loan payments

on the home in which she and Walter lived, and she paid related

property taxes, a homeowner’s insurance premium, and food and

household item expenses. Petitioner also paid home utility

expenses for electricity and natural gas and other miscellaneous

items relating to the maintenance of the home.
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The following table reflects amounts billed to and paid by

petitioner in 2009 relating to the home:

 Expense Amount Billed Amount Paid 

Mortgage $19,654 $19,654

Property taxes 1,550 1,550

Home insurance 540 540

Food and 

 household items 3,220 3,220

Electricity 699 578

Natural gas 596 593

Other 524 476

 Total 26,783 26,611

Walter was born in 1969 and during 2009 qualified as

permanently and totally disabled. See secs. 22(e)(3),

152(c)(3)(B).

On her 2009 Federal income tax return filed with respondent,

petitioner reported $9,804 of income, and she claimed a

dependency exemption deduction with respect to Walter, head of

household filing status, and an earned income tax credit of

$3,043. On audit, respondent disallowed the claimed dependency

exemption deduction, head of household filing status, and earned

income tax credit.

Discussion

Dependency Exemption Deduction

Legislative changes enacted in 20042 relaxed the rules

applicable to dependency exemptions relating to a “qualifying

2See Working Families Tax Relief Act of 2004, Pub. L. 108-

311, sec. 201, 118 Stat. 1169.
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child” of a taxpayer. See sec. 152(c). Respondent’s arguments

and brief do not take into account this less restrictive

dependency exemption applicable to a qualifying child.3

A qualifying child means an individual who: (1) Bears a

qualifying relationship to the taxpayer (e.g., a child of the

taxpayer); (2) has the same principal place of abode as the

taxpayer for more than one-half of the taxable year; (3) meets

the age requirement of section 152(c)(3);4 (4) has not provided

over one-half of his or her own support for the taxable year; and

(5) has not filed a joint return with his or her spouse, if any. 

Sec. 152(c)(1). There is no longer a requirement that a parent

claiming a dependency exemption for a qualifying child have

provided over one-half of the total support for the child.

Generally, in determining the total cost of support, all

sources of support are included. Sec. 1.152-1(a)(2)(i), Income

Tax Regs. The term “support” includes items such as “food,

shelter, clothing, medical and dental care, education, and the

like.” Id. The value of government benefits normally excludable

3Respondent argues that petitioner must show that she

furnished over half of her son’s total support for the year. 

That rule, however, is applicable only to years before 2005 and,

beginning in 2005, only to claimed dependency exemptions that

relate to “qualifying relatives” other than a qualifying child. 

See sec. 152(b), (d).

4Walter meets the special rule for disabled persons under

sec. 152(c)(3)(B) and thus satisfies the age requirement for a

qualifying child.
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from income (e.g., Social Security benefits) may be included in

the term “support”. See Turecamo v. Commissioner, 554 F.2d 564,

569 (2d Cir. 1977), affg. 64 T.C. 720 (1975); sec. 1.152-

1(a)(2)(ii), Income Tax Regs. 

At trial petitioner credibly testified, and we so find, that

the $26,611 in household-related expenses petitioner paid in 2009

represented expenses of both petitioner and Walter; i.e., that a

portion of petitioner’s 2009 expenses is allocable to or

benefited Walter and, accordingly, represents support petitioner

provided to Walter in 2009. 

Respondent argues that the Medicaid benefits Walter received

also need to be included in the computation of Walter’s total

support, and because petitioner has not established that amount,

respondent argues that petitioner has not established the total

amount of Walter’s support. 

We, however, have acknowledged that payments received under

Medicaid are not necessarily included in determining the support

of a claimed dependent. In Archer v. Commissioner, 73 T.C. 963

(1980), Medicaid payments received were held not to involve

ordinary support for the mother of the taxpayer. The Court

noted: 

To require that Medicaid payments be included in

the support equation * * * means that those individuals

whose parents are the neediest will be the least likely

to get a dependency exemption for supporting * * *

[their parents]. This * * * seems exceedingly unfair 
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and contrary to the basic thrust of the Medicaid

program itself.

 

Id. at 971. 

On the limited record before us, we find it appropriate to

exclude Medicaid benefits Walter received in calculating the

total amount of Walter’s 2009 support.

Respondent argues that the proper measure of the housing,

food, and clothing petitioner provided to Walter is the “value”

thereof, which is not necessarily the same as what petitioner

paid therefor. Respondent thus argues that we cannot calculate

the total amount of Walter’s support.5

In determining whether a qualifying child has provided more

than half of his or her own support, the amount of support

provided by the child is compared to the total amount of support

available to the child. However, we have explained that “a

taxpayer is not precluded from being entitled to a dependency

exemption simply because he is not able to prove conclusively the

total cost of the child’s support”. Stafford v. Commissioner, 46

T.C. 515, 517 (1966).

5Respondent notes that petitioner reported only $9,804 in

adjusted gross income on her 2009 Federal income tax return and

questions how petitioner could actually have paid the expenses

she claims. There are a number of possible explanations for the

source from which petitioner paid the expenses (e.g., savings). 

Whatever the source, we accept petitioner’s testimony that she

paid $26,611 in household-related expenses in 2009.
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On the bases of the record before us and petitioner’s

credible testimony, we find that in 2009 petitioner paid $26,611

in household expenses, that these expenses supported both herself

and Walter, and that one-half of these expenses is properly

treated as support petitioner provided to Walter. Only

petitioner and Walter lived in petitioner’s home, and it is

reasonable to treat these expenses as providing support to

petitioner and also to Walter.

For purposes of the claimed dependency exemption deduction

at issue and on the record before us, we conclude that petitioner

provided $13,305 to support Walter (one-half of $26,611) and

Walter provided either zero or $5,430 (depending on whether the

$5,430 in Social Security benefits Walter received is to be

treated as provided by Walter). In either case, Walter provided

less than one-half of his own support.

Petitioner is entitled to the claimed dependency exemption

deduction for Walter. 

Head of Household Filing Status

Under section 1(b), a special tax rate applies to a taxpayer

who qualifies as a head of household. Section 2(b)(1)(A)(i)

provides that a taxpayer qualifies as a head of household if she

maintains a home that constitutes the principal place of abode of

a qualifying child (as defined in section 152(c)) for more than

one-half of the year. A taxpayer is considered as maintaining a
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household only if she pays over half of the expenses for the

household during the year. Sec. 2(b).

In light of our findings that during 2009 Walter was a

qualifying child and that petitioner paid all of the household

expenses, petitioner qualifies for head of household filing

status.

Earned Income Credit

Under section 32(a), a taxpayer may be entitled to an earned

income credit if she has a qualifying child or if the taxpayer

has, among other things, earned income for the year of $13,440 or

less. See Rev. Proc. 2009-21, sec. 3.06, 2009-16 I.R.B. 860.

As we have held, petitioner had a qualifying child, and she

therefore is entitled to the earned income credit for 2009. 

To reflect the foregoing, 

Decision will be entered

for petitioner.