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Dependent Status

Forum|Forum|4 years ago
March 18, 2022
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my 22 year old son wants to claim he supported himself in 2021 and not have me claim him as a dependent. since he was a full time student, his $12.5K in income plus his student loans contributed to more than 50% of his costs. Can he count his own student loan for that determination? His costs were probably ~$30K and counting his loans, he contributed ~$20K coupled with his earnings gross.

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Best answer by Vanessa A

So in the case on my younger son, his Fall Room & Board ($5K) was 'paid' for him along with another $3.3K in Tuition reduction as his compensation for being an RA, so do those 'payments' count towards providing his own support or not, just like his student loans do? I would think so, but I'm not getting clarity and trying to determine if he can claim to be independent or not.

Since he is not being billed for the room and board and his tuition is being decreased, you will just need to decrease his expenses by that amount. It does not count as income, it does not count as something paid. It is a wash and not used as part of the calculations.

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PattiF

Student loans do not count as income. In the eyes of the IRS, these loans do not count towards your annual income.

But the amount of the loan is counted as support provided by the student.

[Edited 03/18/22|10:09 PST]

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Sasquatch67Author

So despite the loans being solely in his name and for the sole purpose of paying for his part of his tuition while at college (along with his income), this can't count towards his supporting himself? He will be the sole person responsible to paying these loans for his cost of living.

As a follow up then, since the loans for college don't count for him for his support (including tuition as support cost), can he then ignore tuition from his cost of living for purposes of support? This way his income supported 100% of his living expenses (rent, utilities, food, gas, insurance, entertainment, etc.), while his student loans counted for less than 50% of his tuition.

His overall income ($12.5k) against his total cost including tuition ($28k) is 45%. Without tuition and the associated loans, that would increase to 100%

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PattiF

Although the IRS does not consider this to be income, it would be regarded as support provided by the student. From the Journal of Accountancy:

"However, if a student pays the cost of tuition and fees or receives a student loan to pay them, that amount is counted as support provided by the student and can cause the child to fail the support test and thereby not qualify as a dependent"

By claiming himself for 2021, he will be eligible for the third Stimulus payment.

I have edited my previous post to include this information.

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