For parents of recent college grads: tax question

Parents Forum
1

<p>Son graduated from college in May 2008. Worked part-time while still a student, part-time over the summer, and began full-time job in September. I've been looking at the IRS website for guidance as to whether we can still claim him as a dependent (qualifying child) for 2008.... my head is hurting already.</p>

<p>I'm assuming any time a kid graduates from college, this issue comes up. How has everyone addressed it?</p>

2

<p>As long as I'm paying more than half, I'm claiming my graduating student as a dependent ... unless of course some new stimulus package quirk makes it financially advantageous for the student to claim the exemption! Since I don't see that happening ....</p>

3

<p>My s & d are both degreed, and still living at home. </p>

<p>Son is marginally employed, and we provide more than 50% of his total support, largely in terms of a place to live and food. D is more gainfully employed, and while we "help" her, she falls below the 50% threshold. As such, I'm claiming s as a dependent, and not d.</p>

4

<p>Run thru the numbers. I think there is a IRS reg where a dependent is dependent for a full year year though not actually dependent for the calendar year. It may be that inorder to be an independent, a person has to be independent for a full calendar year. I forgot which case. </p>

<p>S had some definite tax advantages to be independent from us, even though he still called us Home. </p>

<p>Remembering, It was taking the interest deduction for Stafford Loans; A person cannot be a student/dependent for the year if he was student/dependent for part of a year.</p>

<p>S could not be claimed as a dependent student once he graduated. The insurance company verifies every semester because we had to supply a phone number and person to contact at his school. Moving from a family group health to Worker + Spouse and a separate med ins program for son was only a slight increase in total premiums, which occurred on son's side.</p>

5

<p>To meet Age Test for Qualifying Child, </p>

<ol>
<li> Under age 19 at the end of the year,</li>
<li> A full time student under age 24 at the end of the year, or</li>
<li> ermanently and totally disabled at any time during the year, regardless of age.</li>
</ol>

<p>Your son can be a qualifying relative, if you can pass Gross income test and Support test.</p>

6

<p>for some reason my tax guy thought it was better if child was not classified as our dependent, since this way there would be some benefit for deduction of tuition payment on the child's return. Whereas if child was our dependent and we deducted the tuition payment on our return this was not as favorable, for the family as a whole. </p>

<p>Is this possible?</p>

<p>Of course the facts re: dependent status don't always facilitate/ correspond with what would result in the most favorable treatment.</p>

7

<p>
[quote]
Son is marginally employed, and we provide more than 50% of his total support

[/quote]
Unless they are full time students and under the age of 24, if they make more than $3,500 in 2008 they cannot be claimed by the parents for that year. Even if you provde more than 50% support.</p>

8

<p>In general, to be a taxpayer’s qualifying child, a person must satisfy four tests:</p>

<p>[I omitted #1]</p>

<pre><code>* Residence — has the same principal residence as the taxpayer for more than half the tax year.

  • Age — must be under the age of 19 at the end of the tax year, or under the age of 24 if a full-time student for at least five months of the year, or be permanently and totally disabled at any time during the year.

  • Support — did not provide more than one-half of his/her own support for the year.
    </code></pre>

<p>From IRS site...</p>

<p>Looks like you might have trouble fulfilling the "full time student for 5 months out of the year" requirement, since he graduated in May.</p>

9

<p>Ok, keeping the same senario of a senior graduating in May, is it possible the student claims his own exemption because he made too money but on siblings FAFASA count him as member of the household because he did live in the household?</p>

10

<p>The five months out of the year does not have to be five full months. From IRS Publication 501: "To qualify as a student, your child must be (full-time), during some part of each of any 5 calendar months of the year" and "The 5 calendar months do not have to be consecutive." </p>

<p>As for including the graduated student on the FAFSA, if I recall correctly, there are 5 dependency questions on the FAFSA which, if your child can answer "no" to each, then said child can still be included as a household member/dependent. I think it says something like if you provide more than half support OR can answer "no" to each question.</p>

11

<p>Wow, it really is as complicated as I was afraid it is. Thanks for the input and I think I need to call a CPA.</p>

12

<p>
[quote]
Ok, keeping the same senario of a senior graduating in May, is it possible the student claims his own exemption because he made too money but on siblings FAFASA count him as member of the household because he did live in the household?

[/quote]
</p>

<p>yes, it is entirely possible. if you provide more than half of their support.</p>

13

<p>i grow more & more in love with the ingenious ways FAFSA finds to hold you up in the air by your feet and shake you up and down until all the change falls out of your pockets!</p>

14

<p>We just went through this. Remember, "support" counts the room & board you provided at college for the January-May period. D qualified as a dependent far too easily. Last year we get that benefit.... She squawked a little at not being able to claim herself but being a proto-economist, understood the numbers and relative benefits.</p>

<p>It's not as if some of the furniture for her apartment wasn't underwritten by the First National Bank of Mom & Dad.</p>

15

<p>TheDad - I thought the Bank of Mom and Dad was locally chartered. Congrats on going National.</p>

16

<p>We always called it, "The Greater Bank of Granny XXX"! ;)</p>

17

<p>NH33: funding has routinely occurred on a transcontinental basis.</p>

18

<p>I thought the fulltime student status, even for five months, overruled any income limits as far as reporting them on the parents tax return. </p>

<p>What about scholarship kids? Do the colleges get the exemption for providing the most money? lol</p>

19

<br>


<br>

<p>Room and board are taxable to the student I believe.</p>

20

<p>Okay, I'm still just as confused! We provided R&B support for DD from Jan-July; she was in school full-time until she graduated in May '08. She is abroad on a travel grant now, studying as a non-degree seeking student in a graduate program. So I'm guessing that for FAFSA purposes she is not a dependent, but it is possible that she is for IRS purposes??? Oh, my head she is a'spinning! I hate FAFSA/PROFILE/TAX time, and I rue the day that I joined our little investment club (which is really an eating club which I ENJOY, but having to file a business supplement for our piddly little stock earnings which now wouldn't even buy a very old car) are a PITA. I can't wait until I am done filling out financial aid forms. Just this year and next years then NADA MAS!!!! Back to my question. Can she be claimed as a dependent if I spent more than the travel grant on her? Maybe a moot question, because I haven't figured that out yet. Wonder if I can include the cost of her portion of the health insurance, cell phone plan, etc...</p>