Solved

Should/Must I claim my college student children as dependents

Forum|Forum|6 years ago
April 5, 2020
1 reply
0 views

I would like to know if I am required to claim my children (both college students) as dependents, or if I should even if not required.

I have run TurboTax on both scenarios.

Because of my income, I will not get any tax credit by claiming their tuition. My tax due did not change at all by entering their 1098-T's or any other college info... and reading the worksheet confirms that it is because of my income.

Running a second set of tax files for all of us, TurboTax calculated that my Tax due will increase by $1000 if I stop claiming them as dependents (they are 19 and 21 and live at home when not at school). However, EACH of THEIR tax refunds will change by + $1000 by filing as not being my dependent. This is a net change of + $1000.00 for the household.

Is it legal to stop claiming them as my dependents? Is it a good idea? Is it possible that these calculations are wrong? Would I be able to change back next year if the numbers warrant it? thanks for your help.

TurboTax Home & Biz Windows

Best answer by Hal_Al

No, you don't "have to" claim them. But they don't get to claim that $1000 (each) either. So, just claim them and get your $1000 (two $500 "other dependent" credits).

There's a new urban myth among college students that says they can get a $1000 from the government just for filing a tax form. For most of them, they simply aren't eligible. A full time unmarried student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working*. He cannot be supporting himself on parental support, 529 plans or student loans & grants. It is usually best if the parent claims that credit. If the parents aren't eligible, nobody gets it.

They cannot claim a credit if they are, or can be, claimed as a dependent by someone else.

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.

*When the student indicates, in TurboTax (TT), that he cannot be claimed as a dependent, and TT sees his age and student status, an additional support question, about earned income, is added to the interview. TT appeared to allow the student the credit, because you did not go thru the whole interview again (there is not a glitch in TT).

Hal_AlAnswer

Employee

No, you don't "have to" claim them. But they don't get to claim that $1000 (each) either. So, just claim them and get your $1000 (two $500 "other dependent" credits).

There's a new urban myth among college students that says they can get a $1000 from the government just for filing a tax form. For most of them, they simply aren't eligible. A full time unmarried student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working*. He cannot be supporting himself on parental support, 529 plans or student loans & grants. It is usually best if the parent claims that credit. If the parents aren't eligible, nobody gets it.

They cannot claim a credit if they are, or can be, claimed as a dependent by someone else.

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.

*When the student indicates, in TurboTax (TT), that he cannot be claimed as a dependent, and TT sees his age and student status, an additional support question, about earned income, is added to the interview. TT appeared to allow the student the credit, because you did not go thru the whole interview again (there is not a glitch in TT).

P

PatlmacAuthor

@Hal_Al thanks for your reply...

The $1000 each that I'm referring to is the amount TurboTax added to their returns when I told it that they were not being claimed as dependents by anyone. They DID have part time jobs, but not nearly enough to support themselves... But I would think the tax code would be able to figure that out... TurboTax's error checker found nothing wrong after the change and the refund increase of $1000. In my daughter's case, TurboTax says that she would be getting a bigger refund than the tax she paid. Not surprising that these "urban legends" get going when the program seems to agree with it and then says there's almost no chance of an audit.

I'm not a risk-taker (at least with the IRS), so I'll probably keep them as my dependents... but I'm surprised that TTax doesn't throw up any red flags about this.