What does a multiple support agreement entail?

A multiple support agreement is an important tax provision that allows multiple individuals to collectively provide support for a qualifying relative, enabling one of those individuals to claim the exemption for that individual on their tax return. In current tax law, a qualifying relative typically requires that the individual be supported primarily by the taxpayer who claims the exemption.

The correct choice indicates that the taxpayer will not claim an exemption for the individual in question for that taxable year, allowing another eligible contributor of support to step in and claim the exemption. By using a multiple support agreement, it ensures that there is a formal understanding between family members or other contributors about who is eligible to claim the exemption, which helps to avoid confusion or double claims.

The other options, while they relate to the concept of support and agreements, do not accurately capture the essence of a multiple support agreement. It is neither simply a verbal agreement nor a basic shared financial responsibility, as those terms lack the specificity warranted by the tax context. A written declaration, as implied in the correct choice, is essential in clearly establishing the arrangement and ensuring all parties understand their responsibilities and rights regarding the exemption.