The multiple support agreement (MSA) is a popular tool used by businesses, organizations, and individuals to provide financial support to a dependent. In many cases, an MSA is used to support a child or elderly parent, but it can also be used to support other dependents. With the importance of protecting the rights of all parties involved, it is essential that you follow the rules and guidelines for using an MSA. Here are the main rules to consider:
1. Designate the Primary Supporter
The MSA must have a designated primary supporter who will provide the majority of support to the dependent. This could be one individual or multiple supporters that have agreed to share the responsibility. The primary supporter will be responsible for claiming the dependent on their taxes and providing proof of support.
2. Determine the Amount of Support
The MSA must outline the amount of support to be provided by each supporter. This amount should reflect the actual amount of support provided, including expenses for food, clothing, shelter, education, and medical care. It is essential to keep accurate records of all expenses to avoid any misunderstandings or disputes.
3. Ensure Each Supporter`s Contribution is Documented
Each supporter`s contribution must be documented in writing, typically through a written agreement. This agreement should detail the amount of support provided, the payment schedule, and the responsibilities of each supporter.
4. Follow IRS Guidelines
An MSA must adhere to Internal Revenue Service (IRS) guidelines to be legally recognized. This means that the supporters must provide a minimum of 10% of the dependents` total support, and no single supporter can claim the dependent on their taxes unless they have provided more than 50% of the total support.
5. Review and Update the Agreement
As circumstances change, it is important to review and update the MSA agreement periodically. This includes changes in the amount of support provided, the supporters involved, or any other relevant situations.
In conclusion, an MSA is a valuable tool for providing financial support to dependents. However, it is important to follow the rules and guidelines to avoid any legal issues or discrepancies. By designating a primary supporter, determining the amount of support, documenting all contributions, following IRS guidelines, and reviewing and updating the agreement, you can ensure that the MSA works correctly for every party involved.