Any parents have a dependent student at home that they can no longer claim as a dependent on taxes?
My step daughter just recently did the switch from inexpensive 2 year community college to a much more expensive 4 year private college…
I was claiming her on my taxes while she was in the less costly community college, which she took loans out for, because I figured I was paying for more than 50% of her living expenses…
but while trying to find other information here it looks like she will probably be paying for more than 50% of her expenses in 2017, according to the IRS, if they include borrowed tuition money for the year in her column, which are loans in her name, with my wife as a cosigner.
It all seems absurd because she only made a little over $7000 last year and lived at home…I can’t imagine her making much more this year…but I guess she could borrow enough to put her over 50%.
You would think it’s cut and dry, if she cannot afford to move out she is a dependent, no?
Looks like maybe no.
Anybody else been through this?
I’d like to still claim her as long as I am allowed to according to the IRS. Doing it right is obviously my first priority.
We are in that situation. Our ds has a full ride scholarship plus has participated in REUs in the summers. We aren’t providing any support, so we can’t claim him. Ironically, he can’t claim himself bc scholarships and grants (research funding falls in that category) can’t be used for determining self-support. So no one can claim him.
I would ask if loans are considered support. Not all $$ is considered equal.
If your wife cosigns the student loan then isn’t that borrowed tuition money in both your column and your child’s? Also since she is living with you then you are paying for her room and board - won’t that account for a large chunk of her living expenses? Technically some portion of your housing cost is for her (rent, mortgage, taxes) as well as many of your other day to day expenses (insurance, food, etc.) This should make up to 50% of her total costs.
Anything that happens in 2017 income wise won’t be used for financial aid purposes until 2019-2020 school year. Your daughter is graduating undergrad in spring 2018.
Hopefully after she graduates, she will be in a job and will be self supporting.
If you have a college kid…and she lives at home…I would guess that you WOULD be able to declare her as a dependent on your taxes. Plus…didn’t your spouse cosign those college loans? That isn’t exactly an independent student act.
If she’s living with you without paying rent, the fair market value of her renting a comparable place, plus food and transportation you’re providing all count toward your support.
Our D has always been and remains our dependent–we have always paid 100% of all her expenses. Our S stopped being a dependent upon graduating from college and starting to support himself.
All this is a gray area and IRS will not question your tax returns no matter how you file. You need to sit down with your step-daughter and agree that you both will file in a way that is most advantageous for you family as a whole. Load both your returns in Turbo Tax and run them both ways. In the worst case, you may have to agree to refund her the tax savings that she would have gotten if she would file as an independent (and charge her for room and board).
So, @Mom2aphysicsgeek, if YOU don’t qualify to claim your son as a dependent, he should be able to claim himself. In that situation there is no 50% support requirement.
Does your son not live at home at all now? Because if he does, if he uses your address as his permanent residence & you keep a room for him, you would qualify to claim him. You don’t have to be supplying more than 50% of his support, he just has to supplying less than 50%.
Of course, double check me on everything, but I did serve as a volunteer tax preparer & took the IRS training course.
So it’s fair to say that a $17,000 per year college loan taken out by the step daughter, goes towards her support for herself, even though my wife cosigned, and this will probably put her over the 50% mark of supporting herself?
The understanding is that my step daughter will be paying this back…they just wouldn’t give her these loans without a cosigner.
I would talk to an accountant before just skipping the deduction. The IRS pub linked above includes both loans and education expenses but doesn’t mention cosigning and any impact that may or may not have.
I agree with talking to a tax professional, but some might not have familiarity with college or financial aid related tax issues.
The support test worksheet mentions loans as part of student funds to pay towards support.
With the cosigning I don’t know. Normally the cosigner only is required to repay if the debtor isn’t paying I think.
Maybe if the loans for senior year (or at least fall 2017, to count for 2017 tax year) were taken out as parent plus loans that might be better for your situation, they would be in your name then? But you might not want that.
Since your stepD lives with you all year and commutes, you can count a portion of the living and food expenses (depending on household size) for her all 12 months.
If the health ins is paid by the employer then you can’t count it towards support I believe.
The stepD is also paying for gas and insurance on a car I think.
Yeah, I’ll confirm. I was hoping to claim her while she was 22 and 23 years old but going to this more expensive school that she will ultimately pay for may have changed that.
Would just suck to fall into possible limbo where we can’t claim her and she can’t claim herself.
And if her income is low enough, and federal taxes paid is low enough I wonder if she would be able to take full advantage of her education deductions and credits…or if I would benefit more from them…providing that’s still legit.
The main problem in @Mom2aphysicsgeek’s situation is the kiddie tax that is being charged on the son’s taxable scholarships and grants. If he could file independent for taxes he would have a higher income deduction, but if he didn’t have earned income that is more than half of his support, then kiddie tax applies.
His scholarships and research grants paid all his college expenses and housing costs. But if he didn’t pay more towards his support from earned income (since scholarships don’t count) than his parents, then I agree that they should be able to claim him.
Wouldn’t her expenses be the college tuition (paid for by the loan) plus living expenses that you are providing - rent, food, heat, internet, and possibly car or car insurance? Are her overall expenses less than $34,000? Including tuition, books, etc.?
How would the OP figure out the kid’s share of home expenses? If 3 of them live there, would it be one third the cost of the home (mortgage and taxes)? or the cost of typical rent for a room in a house in the neighborhood?
On your OTHER thread over in the financial aid forum…you say your DD will graduate from college in 2018 spring. In other words…she has ONE more year of college.
How old will she be when she graduates?
When she graduates, don’t you hope she will have a full time job and be self supporting? If that’s the case…even if 23 or 24…you would NOT be able to declare her on your taxes.