BIR Ruling [DA-272-99]

May 7, 1999 BIR RULING [DA-272-99] Mr. Corsino M. De La Pea SB Secretary Office of the Sangguniang Bayan Placer, Masbate S i r : This refers to your letter dated September 14, 1998 addressed to the Secretary of Finance, stating that "My three grand-children whose parents are financially and materially incapacitated for their support, are living with me in one roof and at present enrolled in one of the private school (kindergarten) totally dependent for my financial and material support. I claimed these three (3) grand children as dependents in my income tax return (attached herewith in my AFFIDAVIT OF SUPPORT for reference purposes)". and requesting for ruling on the following, viz: "(1) Whether or not grand children living with their grandparents, dependent financially and basically to the latter's support, considered DEPENDENT of the grandparent? "(2) Is our claim for dependent in the income tax return meritorious/legal?" In reply, please be informed that pursuant to Section 29(1)(2)(A) of the then Tax Code, as amended, a married individual or a head of family was allowed an additional exemption of P5,000.00 for each dependent not exceeding four (4). The term `dependent' means a legitimate, recognized natural or legally adopted child chiefly dependent upon and living with the taxpayer if such dependent is not more than twenty-one (21) years of age, unmarried and not gainfully employed or if such dependent, regardless of age, is incapable of self-support because of mental or physical defect. In short, the additional exemption was limited only to a legitimate, recognized natural or legally adopted child. Accordingly, since the dependents claimed in your 1997 income tax return are admittedly your grandchildren, you cannot claim additional exemptions on them even if they are wholly dependent upon and living with you. STcADa This ruling holds time with respect to your income tax return to be filed on or before April 15, 1999. Thus, you cannot claim the additional exemption of P8,000.00 allowed for each legitimate, illegitimate or legally adopted child under Section 35(B) of the Tax Code of 1997 for your grandchildren. Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue