Q: My mom died in November 2006 and my father’s health soon began to fail, so dad moved into my home in April of this year so that I could take care of him. I love him dearly and, for obvious reasons, I don’t ask him to pay any rent. I also pay for his food and spend a lot of time and money to drive him to and from his doctor a few times a week. Because dad lives with me now and I provide nearly all of his financial support, can I claim him as a “dependent” on my next tax return?

A: Yes, the fact that you provide housing and other financial help to your father makes you eligible to claim him as a dependent and trim thousands of dollars off your future income-tax bills – provided that the arrangement meets three key “tests” imposed by the Internal Revenue Service.

You obviously meet the first test, which says that the person you want to claim as a dependent must be a relative.

The second requirement is that you must provide at least half of the prospective dependent’s support: You appear to meet this test too because your dad doesn’t pay any rent, you buy his groceries and you personally bear the cost of driving him to and from his medical appointments.

The final requirement can be a bit stickier to meet: IRS rules state that taxpayers aren’t eligible to claim the deduction if the prospective dependent makes more than the standard personal tax exemption itself. The personal exemption for this coming 2007 tax year is $3,400, and is forecast to rise to about $3,500 in 2008.

Fortunately, the IRS generally excludes a retiree’s Social Security or disability payments from the exemption thresholds.

So even if your dad gets, say, $6,000 per year in Social Security benefits and another $2,000 in disability payments, you still should be able to claim him as a dependent on your next tax return even though he collects more than $3,400 in annual payments. Consult an accountant for details.