Question

Is it more beneficial for my college student to claim self?

Forum|Forum|6 years ago
February 21, 2020
1 reply
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We have 2 children in college, both earning their 1st degree in their 1st 4 years. Besides tuition, they pay for all other living expenses and have jobs that earn less than 18k a year. We typically have some of our credits phased out due to my husbands income level. Is it more advantageous for us as parent to claim them as a dependent or for them to claim themselves and receive the educational credits?

DavidS127

It depends. The nonrefundable and refundable portions of the AOTC your children would get may be more than what you get for the AOTC and the Additional Child Tax Credit.

Based on the children's income, it sounds like each of them must file a tax return anyway. So the most practical thing to do, before anyone files a return, is to prepare the returns "both ways" and see which filing option is best for all concerned. Then, be sure to delete the education expenses from the tax return(s) that won't be claiming education expenses.

Note also that if your children provide more than 50% of their support (including education expenses) you can't claim them as a dependent.

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Hal_Al

Employee

Technically, it's not optional whether a student claims himself or not. He either meets the rules, for being a dependent, or he doesn't.

That said, with the tax law change, effective 2018, most students will get the same refund whether they claim themselves or not. The personal exemption has been eliminated and the standard deduction increased.

But there is a special rule that allows the parent to forgo claiming the dependent (and the $500 other dependent credit*) to allow the student to claim the non refundable portion of the tuition credit, on his return. The credit can be as much as $2000, but can only be used to offset an actual tax liability.

A full time unmarried student, under age 24, is only eligible for the (up to $1000) refundable portion of the American Opportunity Credit if he supports himself by working. More than half his support must come from earned income.

*You don't get the $2000 Child tax credit or additional child tax credit for children over 16.