529 dependent or not - best way to file

Forum|Forum|5 years ago
March 28, 2021
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My son is 20 years old who lives at home. We have a 529 plan and that pays for his tuition. Last year I claimed him as my dependent and received $2500 tax credit. This year we are thinking he will claim himself as a dependent as he has a job making around $18,000/yr, will I still receive the tax credit? Would he receive the full tax credit?

Hal_Al

Employee

Q. Will I still receive the tax credit?

A. No. He must be your dependent. in order for you to claim the education credit.

Q. Would he receive the full tax credit?

A. No. Only $1000 is refundable. He only has enough income (and enough tax liability) to get about $500 of the other $1500. Further more, more than half his support must come from earned income to get the refundable portion, even when he is not a dependent.

You may still claim an exclusion of the earnings on a 529 plan, even if the student-beneficiary is not your dependent.