When does the sum of the parts equal more than the whole? One time is when using a "multiple support agreement" to salvage a dependency exemption.

Starting point: As a general rule, you may claim a dependency exemption for someone only if you provide more than half of his or her total support for the year and the dependent's gross income subject to tax is less than the personal exemption amount. The personal exemption amount for 2010 is $3,650 (the same as it is on 2009 returns).

There are, however, several exceptions to these basic rules. For instance, if you pass the half-support test, you can generally claim a dependency exemption for a child who is younger than 19 years (or a full-time student younger than 24 years), regardless of how much annual income he or she earns.

You may even be entitled to a dependency exemption for an elderly relative without meeting the half-support test by yourself. This is where a multiple support agreement can come to the rescue.

Example: You and your two siblings all chip in to help your aging mother pay her bills. Each one of you provides 25% of her total support for the year. So the three children collectively provide 75% of mom's support. She uses her Social Security benefits for the bulk of her support. Her annual investment earnings are below the personal exemption amount.

At first glance, none of you can claim a dependency exemption for Mom because no one meets the half-support test. But together you provide more than half of her support.
Note: Although Social Security benefits may be subject to income tax, they do not count as gross income for purposes of the dependency exemption.

As long as certain other requirements are met, the three children can sign a multiple support agreement, taking effect for the current tax year. A professional tax adviser can help you fill out the necessary paperwork. Under the agreement, one of you is able to claim a dependency exemption for Mom on your tax return. To be fair, you can trade off the exemption from year to year (assuming you still qualify). The person claiming the exemption must provide more than 10% of the relative's support.

Caution: Be aware that there may be other complications with a multiple support agreement. For instance, some of the tax benefit of personal exemptions is phased out for certain high-income taxpayers on their 2009 returns (e.g., beginning at an AGI of $250,200 for joint filers). Remember this point when you choose the person who is entitled to claim the exemption in any given year.

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