“If her expenses have gone up (higher tuition) so have her overall expenses. She’s still not paying half her own support. You have to consider earned income.”
You sure about that, for me, going forward?
“Why are you arguing that she is independent for tax purposes? YOU don’t want her to be, and she’s not, so why try to reason that she is?”
First and foremost I want to make sure I am getting it right with the IRS.
A close second is that I claim her on my taxes for as long as it is lawful.
IMHO @SaturnzBarz with what you are providing for step dau, she is a dependent for tax purposes. Using turbo tax, there also is the American Opportunity and Lifetime Learning Tax Credits, which turbo tax would have stepped you through.
I agree about having a sit down and explaining that she is not being ‘shorted’ in ‘free’ financial aid as your dependent. She is getting mis-information or half truths.
Also make sure all this is settled before W co-signs on any additional student loans.
Sounds like step dau is trying to be responsible. Hopefully she will be in paying back her student loans.
But are loans are not expenses while not being paid? I think not.
There is often a"aid " for grad school, in the form of research or teaching assistantships. Tuition waivers, etc.
And as far as the IRS goes, I’m on the side that says she’s a dependent. Period. If the IRS were to later question- a very, very remote risk- you would explain it as here. You’d have a nice discussion. Your reasoning is defensible and you wouldn’t get sent to some gulag to smash rocks.
The risk is when some kids earn far more. Or families are shifting income to hide tax liability. A much bigger kettle of fish.
**corrected first line.
I read something at a link provided earlier that student loans taken by the student, being eventually paid for by the student, go in his or her expense column for determining whether or not they fall above or below the paying for 50% or more of their living expenses. When she was taking out loans at an inexpensive community college I did not sweat doing the complex calculations to see if she paid for more than 50% of her expenses because I was nearly certain that was impossible…
…but now she is going to a considerably more expensive school I think and I’ve never been audited and asked to repay taxes with interest and I think it would really rattle me if I did…things are already too close to the bone as it is. I may now need to add up our numbers and compare so I know that I am still legit and within the law to claim her as a dependent.
Graduate school financial,aid is largely merit based and is based on the strength of the student application AND the college’s desire to have that student in their graduate cohort. Grad school aid comes in the form of scholarships, grants, sometimes work study, assistantships, fellowships, and…loans.
Some grad fields have more money to fund programs than others. Some colleges have more money than others.
For medical and law schools, parent income is usually still included on the financial aid forms.
For all other programs, the grad student financial aid forms include ONLY the student income.
Grad students can borrow up to the full cost of attendance using Grad Plus loans…no cosigner. I would NOT recommend that route…but it’s possible.
turbo tax probably told you that you were very low risk of being audited @SaturnzBarz - plus your family income puts you at low risk for audit. Do not sweat ‘possibilities’ in the future when you most likely are very correct in claiming her as a dependent.
Your shelter and food, insurance, are plenty over 50%.Student loans don’t go in cash outlay as part of what she is paying for - she is not ‘paying’ on current time. Current time you are providing at least 50% support. End of story.
Shelter and food are the big ones in my column. I thought health insurance too, but it looks like insurance provided by employer does not go towards either of our support.
Her tuition went from under $5000 a year to somewhere in the vicinity of $18,000 a year. If I am not mistaken college loans taken by her go in her support column. I want to get this right going forward. I feel confident I got it right in the past.
The loans are LOANS. They are not currently being paid for by your daughter…AND they were cosigner by your wife.
Your daughter is NOT paying on her student loans. And they are college loans…
Read post 85 again…or better…contact a tax specialist in your area. Make an appointment. Take ALL of your info to that person, and get their opinion on whether your step daughter continues tombe a dependent…or not. Remember to tell them that for ALL of 2017, she will be a full time college student residing in your home. Those are key pieces of information.
But really…for purposes of answering the OP to this thread…IT DOES NOT MATTER. Your finances would have been included on your step daughter’s financial aid forms regardless of anyone’s tax status.
The only way around this…she could,have moved in with her bio dad…then she would have used HIS income…and the income of his spouse (if there is one).
Her biological father is in Colombia. My wife and step daughter immigrated to the US.
I will talk to a professional. I am confident I got it right in the past and I want to continue to do so. The information I have obtained so far from the little reading I have done suggests her college loans are put in her support column for that year on the tax worksheet and I believe this new expensive school has put her over 50% of her own support for 2017.
And 2017 isn’t over yet, so you can still potentially contribute more towards her support than her, in order to be able to claim her for this year. A tax professional might be able to help with that.
Honestly, I found that scholarships are excluded, but not a word on college loans, related to this. You have to consider what is truly either a current expense or current self-support. Loans are paid later.
Thumper and others, seems to me, even if loans are considered inflow, all they do is reduce the outflow (expense) of tuition, in educ expenses. 18k - 18k = 0. It’s worded confusingly, but is simple math. Often, it helps to try to glean the intent. And that’s not to catch the tens of thousands of families where the kid works PT. It’s kids earning gobs. Or parents in a much higher bracket, trying to pull something.
OP, we don’t know your utilities, food, and other ongoing figures. But for a child working part time, living at home, I personally would consider mine dependents.
“And 2017 isn’t over yet, so you can still potentially contribute more towards her support than her, in order to be able to claim her for this year. A tax professional might be able to help with that.”
I am not in a financial position to do that, and if that $18,000 tuition loan goes in her column as support by her on dependent worksheet I don’t think that could be overcome anyway.
I am not too worried about it as long as I get it right.
“OP, we don’t know your utilities, food, and other ongoing figures. But for a child working part time, living at home, I personally would consider mine dependents.”
I just want to be careful and sure. Getting fat refunds is nice, but I never want the IRS telling me I got it wrong and ask me for a sum of money I can’t easily come up with.
I pay quite a bit in rent, and nearly as much in food, and I pay for cable TV, which one-third of is considered support for her that I pay for, but I don’t keep her car going or pay her cell phone bill, and now she may have this tuition in her column, despite being paid for with loans…in her name.
I’ll just add this. Someone may have a counter. But:
In fact, now you got me to look at D1’s taxes for the year she graduated college, then earned 11.5k. She is listed as a dependent on the parents’ return. On hers, the “personal exemption” is 0 (reflecting she’s a dependent, can’t claim herself.) And during the semester, then the last four months, she was not living at home. (That fall, she had a grant abroad, from which she did pay living expenses.)
We had a fancy specialist CPA firm work on ours, owing to another issue. Once they knew she was a student X months of the year (and that her income was taxable,) that was it. Our mortgage payment was similar to OP’s rent, family of four. So it isn’t as if the base calculations are that different.
I wonder if this mirrors your situation, @thumper1, when your D graduated.
The fear is always, will the IRS ruin my life The reality is your position is defensible.
Just make sure your ducks are lined up, before you speak with a CPA.
lookingforward, did you pay for “D1’s” college, or were the loans in your name…or her name? That might be the difference maker.