Can a full time dependent student claim the MI homestead property tax credit on off-campus housing rental?

Forum|Forum|6 years ago
June 1, 2019
3 replies
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This has to be a common situation: Full time student, dependent on parent's return, worked so had some income for the year, renting an apartment (it is not in school housing), and paying for heat separately. Parents live in own home in MI, where student would otherwise live if not living on-campus or near the "away" school in MI. Combined, we are paying a small fortune in off-campus (private) apartment rent & utilities at a couple MI college towns, so it certainly would be nice if there were some recovery, even if only a few hundred dollars.

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Belling

Employee

Unfortunately, no. The only way for your son/daughter to be able to claim the MI Homestead Property Tax Credit for this off-campus apartment, would be if your child filed his/her own return independently.

Below I have included a link to Michigan's Department of Treasury Website- specifically the section on eligibility for the Homestead Property Tax credit.

http://www.michigan.gov/taxes/0,1607,7-238-43535_43538---,00.html

ddv_worldAuthor

Employee

Thank you for your reply; However, I disagree after reading the details of the MI instructions, in that the there is no mention that eligibility for the MI Homestead Property Tax (HPT) credit requires that you NOT be a dependent on another taxpayer's return.

While that little detail is actually singled out for the MI Home Heating Credit, it is not for the HPT Credit.  In fact the filer can be a dependent on another return for the MI HPT Credit eligibility, however the total "household resources" (MI 1040 line #24) must of course include the amount that the parent provided to the student that allows them to be considered a dependent (i.e. over 50% of the dependent student's total household resources).

Because the off-campus apartment is being leased in the student's name for the full 12 month year (i.e. under contract), and the student pays the rent (receipts saved), it appears that the student qualifies.  It seems that since the student plans will continue to rent 12 month leases to finish college, it becomes "the place the student returns to from being away" per MI definition, so the apartment nearby the university has essentially become the student's permanent home or "domicile", based upon the definition for the purposes of MI tax code.  The is no indication that a MI resident who is a dependent college student, cannot consider their off-campus apartment their domicile / permanent home for MI tax code.  The dependent student's MI return therefore would need to use the student's apartment address.

With respect to the student qualifying as a dependent under the FEDERAL tax code to count as an exemption on Fed 1040 (and therefore as an exemption on the MI return), the federal instructions indicate a child, of age 24 or less, who is absent due to the special circumstance of "education", still qualifies as being a member of the parent's household, and counts as a dependent exemption when receiving more than half of support from the parent.  The dependent student's FED return therefore would need to use the parent's address.

If I am mis-interpreting or missing a tax rule somewhere that disqualifies eligibility for the MI HPT Credit for the situation that I have presented, it would be great if someone who is very familiar with MI tax code & returns could explain the fault... There must be many other parent & student taxpayers in this exact situation either already filing for the credit, or wanting to if it is allowed.

DanHe

I've submitted for both my children the Michigan tax and claimed the MI homestead property. I received a letter from Michigan Department of State that the claim was denied, and my children where only paid back few dollars of return and not the credit. I support more than 50% of their expenses, but I have my kids work and pay their rent. This is very frustrating that Turbotax doesn't recognize this as a problem and does not let you know that this is wrong, if it is wrong. Or is frustrating that Michigan does not recognize that children can still work and get paid enough to cover for their rent. And they should be reimbursed the credit.

FYI I am now filling a worksheet for determining support form 4622. Maybe this will help or who knows, now my kids will have to pay taxes on the money I provided them for tuition and food and clothing.

The story continues.

zg1212

By reading MI instruction, dependent student should be able to claim HPT credit. But it might be easier to claim it in the student's tax return than in the parents' tax return. And adding parent support amount into student income might get complicate.