Title. I’m positive I made a really stupid decision. My peers kept vilifying me for not having filed my taxes in the past (I never made enough to have that be required), so I thought I’d do it this year. Refund checks came today and my parents were upset with me for having filed my taxes. Now my older friends are vilifying me for filing my taxes while being a dependent and not consulting my parents.
I get it. I get what I did was dumb. But exactly how bad is this situation? I’m a student entirely dependent on financial aid and apparently I might have taken a dependent out of my parents’ return, which hurts the aid immensely. My AGI was also much larger than what I got out of my job due to scholarship money/unearned income, and this might make a decent hit in my aid.
I’m looking over my tax return right now, and the box that says “Someone can claim you as a dependent” is checked, but taxes and the IRS are unpredictable, so I’m still paranoid, and I obviously didn’t communicate to my parents about this.
Tips? Advice? I’m kind of freaking out about this, especially since my financial aid is already in a odd purgatory situation due to unrelated circumstances.
As long as you didn’t claim yourself as an exemption you should be ok. If your parents provide more than half of your financial support, you aren’t supposed to claim yourself as an exemption on your tax return - your parents do that on theirs.
If you made a mistake and claimed an exemption, I believe you can submit an amended return.
But if you filed that you can be claimed as a dependent, then I think all you did was get back the taxes refund you were due. I can’t imagine you caused any harm.
My take from this: stop listening to these “peers” who seem intent on making you feel inferior. Your parents should file as they always do. If you made a mistake, you can submit an amended return as indicated by @LeastComplicated. Unless you made more than $12K you don’t pay taxes and anything withheld you should have received back as a refund. Even after that amount, the taxes are insignificant, unless you somehow managed to make alot more while in college which is doubtful, yes?
Relax. My kids have filed their own taxes since they were 16 and it had NO impact on parent tax filing. The noted that someone else could claim them as a dependent…and we did.
For the second part of your question…about aid? Actually if you file a FAFSA form, your tax filing will make it easier to file your FAFSA for 2020-2021…because you can link your return on the FAFSA via the IRS Data Retrieval Tool. Easy peasy. You have to report your income whether you file taxes…or not.
How are you supposed to get a refund that you’re entitled to if you don’t file a tax return for yourself? I don’t understand the logic here. It’s common for children who are claimed as a dependent on a parent’s tax return to file their own return. In fact, it’s very often required, and in most cases it won’t make a bit of difference in how the parents file or the amount of taxes the parents owe or refund they get.
Filing your own tax return won’t make any material difference in how much need-based financial aid you get, as long as everything is reported truthfully and accurately, on both the tax return and the financial aid documents.
If OP can be claimed as a dependent on someone else’s tax return, his standard deduction may very well be less than $12k. It depends on the types and amounts of all of his income.
I don’t get it either. If you earned your own money, don’t you have to file? We’ve been helping our daughter with filing her own tax return since she was 16.
Just make sure you filed as a dependent. If not, file an amended return.
Heck of a time to be rushing headlong and without some background re what the IRS expects. It’s not so hard to find and read up on dependents filing. Life lesson.
Agree with others. IF there’s an issue, you fix it. Life lesson.
We had some problem with the way D2’s income was reported one year and had to correct, after filing taxes and FA forms. Corrected each piece: taxes, FAFSA, css profile.
Not sure why your parents would be upset with you for filing to get your own money back. If you made a mistake and did not report all of your scholarship income properly - you can fix that by an amended return, and your parents can (probably) get the full AOTC.
If you have to file an amended return as you got too much back in the prelim refund, pay it back before the April 15th filing date and you should be able to avoid a penalty.
Relationships between a young adult and his/her parents at this age can bring out plenty of frustrations as both parties roles are changing, which isn’t always easy. Throw in the stress-inducing topic of taxes, with its own political dynamics - will only add to blood pressures rising.
You won’t be the first kid or family that may have to fix a return. Financial aid offices are used to this happening.
Parents won’t really benefit from declaring you as a dependent since there are no personal exemptions (formerly worth $4,050 per person) starting in 2018. However, if your parents’ income is less than $200,000 in total, they might have been able to use your deduction for the child tax credit.
Assuming this college student is over age 17, his parents couldn’t get the child tax credit but could get a $500 credit for a dependent. They could also get the AOTC if eligible.
But it doesn’t appear there is anything wrong with the filing. He did claim someone else could take him as a dependent, so the parents can.
One problem is that you need to make sure that your coordinate with your parents to maximize any educational tax benefits (see IRS Pub 970). For example, you might declare part of your scholarship taxable in order to claim the AOTC.
If you didn’t pay more than 50% of your own support, then your parents should be able to claim you as a dependent on their taxes (scholarships and grants don’t count towards your or parent support).
Student loans would count towards your support.
You can still file a tax return and get federal tax you overpaid back.
It seems you correctly checked that your parents can and will claim you as a dependent.
For the 2020/21 FAFSA you will report your 2018 income and can use the IRS retrieval tool to import tax information.
Then in question 44d you will report how much of scholarship was included in AGI on your 2018 tax return. The FAFSA will then subtract that from your income.