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Qualifying Dependent Child - Income

Forum|Forum|1 year ago
January 9, 2025
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Ok so last year when using TT to file, my son was a qualified dependent child. This year TT says he is not.

He is still living at home, still in school full time, still under 24, etc. but this year they are asking if his income is less than $5050. That is a question that in the past was only asked for a qualifying relative, not child.

Here is the screen in TurboTax (see bottom question):

89e79dd5-adba-4d04-b39e-021b6f01f746.jpg

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Definitely an error with the TurboTax form. It should not be asking this "Was ThisChild's gross income $5,050.00 or more in 2024?" question when determining a "Qualifying Child".

See the IRS info:
https://www.irs.gov/credits-deductions/individuals/child-tax-credit

Use the Interactive Tax Assistant to see if you’re eligible to claim the CTC, ACTC or ODC:

https://www.irs.gov/help/ita/does-my-childdependent-qualify-for-the-child-tax-credit-or-the-credit-for-other-dependents

I just went through it and no question was about exact income (nothing about $5050), and I got what I expected (my Child can be claimed as a ODC):

ThisChild is not a qualifying child for the Child Tax Credit.

ThisChild did not meet the age requirement. To qualify, ThisChild had to have been under age 17 at the end of 2024.

ThisChild qualifies for the Credit for Other Dependents.

So yes, I can get a $500 deduction. Now I have to:

Get TurboTax to fix this. -OR-
Just lie on the TT form as the actual tax form should come out right. -OR-
Decide that a $500 deduction will not help me that much, and for student grant considerations perhaps it is best to let him file and state that no one can claim him as a dependent.

It's from 2021 filing doc (likely an updated version exists), but it shows you that the income question we are seeing now in TT is for a "Qualifying Relative":

Publication 4012 (Rev. 10/2021)

For "Qualify Child" only these questions are asked by the IRS:

overview_of_the_rules_for_claiming_4012.pdf

TurboTax Deluxe Online

Best answer by BGC3

I'm hoping this post is dispositive of this issue for most. Basically, in the online version at least, TT changed how they handle it this year. They should not be asking the $5050 question for a bona fide child. For whatever reason, they are, and when you select "yes", it increases your tax liability. However on one of the very next screens, it asks for "uncommon" situations. Included in there is that your kid is a full time student. Select that and then your liability returns to what it was before.

Don't know why they changed it up this year or why having a kid in college is now an uncommon tax situation. In fairness, most of us didn't read the screens closely enough. In our defense, they completely changed how they handled it this year.

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xmasbaby0

Employee

Take a closer look at the question that asked if the CHILD paid for over half of his own support. Your answer needs to be NO.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

gwgastonAuthor

Nice try but no that is not asked BEFORE the income question, only after (and in 2 places if you say No to the $5050 question). It is asked after you say NO to the $5050 question, that again should not be there.

The first screen of questions after you confirm the relationship is "My child" and provide all the child's info:

ThisChild is my:
Son
Daughter

Did ThisChild live with you for the whole year?
Yes
no

Was all that time in the U.S.?
Yes
No

Who are ThisChild's legal parents?
Me and Her
Me
Her

And tada! Next question is:

Was ThisChild's gross income $5,050.00 or more in 2024?
Yes
No

IF I select No here, THEN the question appears:

Did you or Her pay for more than half of ThisChild's living expenses in 2024?
Yes
No

And If I say Yes there and continue, it then lists the "Less common situations for ThisChild" and I check the box for "Was a full-time student in 2024". The last question there is "Paid for more than half of their living expenses and other support" and I do NOT check that. Click continue and I'm told "Not a dependent this year"

Wrong in TurboTax. I'm waiting until EOM to actually start on the taxes and will see if they fix this, but I do not have a good feeling about TurboTax and their lack of support on bugs/mistakes in their application.

X

xmasbaby0

Employee

@gwgaston Sometimes it helps if you just completely delete the dependent and start over by entering them again in MY INFO and going through the screens again. Try that and see if it helps.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

VolvoGirl

Employee

Not to doubt you but is your screen from Turbo Tax? It doesn't look like TT. Was that black box about Qualifying Child Test on the same screen?

Hal_Al

Employee

@gwgaston said "Decide that a $500 deduction will not help me that much, and for student grant considerations perhaps it is best to let him file and state that no one can claim him as a dependent."

You're not allowed to do that. There is a rule that says IF somebody else CAN claim him as a dependent, he is not allowed to claim himself. If he has sufficient income (usually more than $14,600), he can & should still file taxes. In TurboTax, he indicates that somebody else can claim him as a dependent, at the personal information section. TT will check that box on form 1040.

With the tax law change, effective 2018, most student-dependents will get the same refund whether they claim themselves or not. The personal exemption has been eliminated and the standard deduction increased. However, he only qualifies for an education credit or deduction, if he is not claimed as a dependent.

gwgastonAuthor

>> "Decide that a $500 deduction will not help me that much, and for student grant considerations perhaps it is best to let him file and state that no one can claim him as a dependent."

> @Hal_Al - You're not allowed to do that.

Good to know. But 'allowed' is not really a word for me here as I'm allowed to not claim him. He is the one that is not permitted to take the personal exemption. My son is doing his own taxes (whatever the EZ form is now). So might be better to word that as he is not allowed to do that. If he does and I try to claim him as well, then the IRS will reject my return that contains his SS#. I would need to get him to file a 1040X and amend his return and then one or both of us resubmit a paper return. Also if he takes the personal exemption and I DON'T claim him, if the IRS catches this it could cause an issue for both him and whomever can claim him (me - presumably). Seems they are OK if he doesn't claim himself and I don't claim him either. 🙂

The point of this thread was that there were bugs and contradictions in terms of what was deemed a "Qualifying Child" on the online version of TurboTax. I worked with TurboTax to confirm this. They committed to correcting the issues, and when I first checked I thought that they had "for the most part" gotten me to where I originally thought I should be (turned out not really as getting the "Dependent" status changes with the flip of a coin practically). Look back at my initial posts where I wrote about the status last year and about the IRS ITA outcome I got *at that time* of my son being a Qualifying Child that could be claimed for the $500 ODC credit.

But in reality, all is still not well.

I went back and created two new dependents. I said "Yes" to the question about whether my dependent "made $5050 or more in 2024", the first one came out the other end with Status: Dependent

Still though if I go back and edit this dependent after getting the "Dependent" status, I can't get back to the income question. I only see it if I create a new dependent and only that one time if they get deemed "Dependent". I will not see it again. But then using the same info with different name and SS#, I get different screens of questions for the "Less common situations for xxxx". First time there were 10 questions, but now there are only 8 for this new entry. What is missing is the questions about whether "xxxx was a full time student in 2024" and the question about "Was financially supported by a relative who lived in your home for more than half of 2024".

So they haven't fixed anything really yet.

In an interesting twist, when I go to the IRS Interactive Tax Assistant (ITA) *now*, it DOES ASK an income question as the very last question. It asks you to enter an amount in dollars. It does not ask you "Was xxxx's gross income $5050 or more in 2024?" No question about amount of income was there before. But now when I put in the income it switches from Qualifying Child to Qualifying Relative and says does not qualify. Can't make this stuff up!

So NOW the IRS ITA I linked previously is saying he does NOT qualify! Even better the last modified for the page still reads as Nov 2024.

And one more, one more thing: The IRS ITA switches from saying " xxxx qualifies for the Credit for Other Dependents" to "xxxx does not qualify for the Credit for Other Dependents" when you put in a value of $5,200 or more... not $5050.

So this is a mess that frankly is not worth a $500 ODC credit to me. I plan to call TurboTax back and update them, but to be safe at this point:

It would seem best if neither I nor my son claimed him.

Hal_Al

Employee

It would seem best if neither I nor my son claimed him.

There are limited circumstances when you would want to not claim him (but, yes you are allowed to not claim him). Letting him claim the education credit would be one (see below). There is no more personal exemption. "Not claiming himself" is just a matter of checking a box on form 1040 saying that somebody else CAN claim him. He does not indicate anywhere on the IRS forms whether somebody will actually claim him (but he does indicate that in TurboTax).

While technically there is a provision that allows your student-dependent to claim a federal tuition credit, from a practical matter it seldom works out. A full time student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit (AOTC) if he supports himself by working. He cannot be supporting himself on student loans & grants and 529 plans and parental support. It is usually best if the parent claims that credit.

If the student actually has a tax liability, there is a provision to allow him to claim a non-refundable tuition credit. But then the parent must forgo claiming the student as a dependent, and the $500 other dependent credit. The student must still indicate that he can be claimed as a dependent, on his return. This is worth up to $2500 (AOTC shifts to all non refundable)

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cdcarlile

I'm having the same problem! I read through all the responses and can't believe that TT is answering as if you made a mistake. Did you ever get a positive result that they have a bug in their software?

No text available

When it asks whether my child made $5,050, I answer no (which is not correct), but the end result seems to be correct. I don’t think the incorrect answer is submitted to the IRS, so hopefully not a big deal to lie to Turbo Tax’s stupid program so long as it spits out the correct bottom line to the IRS. I will not use TurboTax again, that is for sure.

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DKW257

I got the same question about the income for child 1 (21, who made $5743), but not child 2 (19, who made $3047). In the end TT calculated the $500 credit for both of them.

KrisD15

Are either one (or both) a student?

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V

Val B

I am having this exact same issue in the downloaded Deluxe +State version. My son is 19, lived at home all year, and made more than $5050 last year. The software didn't ask if he paid more than 1/2 of his own living expenses or was a full-time student, and just automatically stated that he could not be considered a dependent.

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xmasbaby0

Employee

@Val B Go through MY INFO again for your son. We have been seeing users who miss one of the screens that is titled "Less Common Situations"----on that screen you can indicate that your son was a student.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**