How does a FT student determine her self support status? Lives on campus and 99% of her expenses are college payments (tuition/room/board). Is it based on who pays it?

Forum|Forum|1 year ago
December 7, 2024
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She worked during the year and paid for about 53% of her tuition from her earned income. The rest was paid from 529 plan that’s managed by her parents.

xmasbaby0

Employee

https://ttlc.intuit.com/turbotax-support/en-us/help-article/taxation/financially-support-another-person-mean/L1fNK73x7_US_en_US?uid=m4eql9m0

**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.**

xmasbaby0

Employee

WHO CAN I CLAIM AS A DEPENDENT?

You can claim a child, relative, friend, or fiancé (etc.) as a dependent on your 2024 taxes as long as they meet the following requirements:

Qualifying child

They're related to you.
They aren't claimed as a dependent by someone else.
They're a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.
They aren’t filing a joint return with their spouse.
They're under the age of 19 (or 24 for full-time students).

No age limit for permanently and totally disabled children.

They lived with you for more than half the year (exceptions apply).
They didn't provide more than half of their own support for the year.

Qualifying relative

They don't have to be related to you (despite the name).
They aren't claimed as a dependent by someone else.
They're a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.
They aren’t filing a joint return with their spouse.
They lived with you the entire year (exceptions apply).
They made less than $5050
You provided more than half of their financial support.

When you add someone as a dependent, we'll ask a series of questions to make sure you can claim them. There may be other tax benefits you can get when you claim a dependent.

Hal_Al

Employee

Even though the student may be "away at school", she is, normally, considered as still living with her parents, for tax purposes. As such, the cost of that home is included in the support test.

The support value of the home, provided by the parent, is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants. Other support expenses include clothing entertainment and transportation.

The IRS has a worksheet that can be used to help with the support calculation. See: http://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf

alecfuhrmanAuthor

What role does the college payments for tuition, room and board play in this? Especially in the context of the house where her parents live and which is considered her permanent residence for tax purposes ?

Hal_Al

Employee

The questions you are asking usually indicates that you are trying to let your daughter claim the tuition credit. It does not matter whether the student or the parent actually pays for the college expenses. What matters is whether the student qualifies as the parent's dependent. The tuition tax credit goes with the dependency. If the student qualifies as a dependent, the parent claims the tuition credit, even if the student paid her own tuition.

If the student is not a dependent, she can claim the tuition credit on her own tax return. If she is under 24, there is an earned income requirement for the refundable credit.

A full time unmarried student, under age 24, even if you don't qualify as a dependent, is only eligible for the refundable portion of the American Opportunity Credit (AOTC) if she supports himself by working. You cannot be supporting yourself on parental support, 529 plans or student loans & grants. It is usually best if the parent claims that credit.

You cannot claim the (up to) $1000 refundable credit if you are, or can be, claimed as a dependent by someone else.

Reference: Line 7 instructions for form 8863.

https://www.irs.gov/instructions/i8863#en_US_2024_publink53002gd0e674

https://www.irs.gov/instructions/i8863

The law was written this way to specifically prevent shifting the AOTC to the student because the parent is not eligible).

So, the student paying more than 50% of her college expenses, with earned income, is not enough. She must pay more than half her total support, including home expenses, with earned income.

If the student actually has a tax liability, there is a provision to allow her 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 she can be claimed as a dependent, on her return. This is worth up to $2500 (AOTC shifts to all non refundable)