I’m curious. Last year, our CPA told us we were at the point where we would have a hard time claiming our oldest as a dependent because of the amount of money she earned. She didn’t have any super high-paying jobs, but she worked a lot. This year, after graduating and working full time from Aug-Dec, there’s no way we can claim to have covered more than 50% of her expenses. So, she will file as single, not able to be claimed and a dependent, and get that fourth year of AOTC credit for herself.
I hear on CC of students making huge amounts of money as interns and in co-ops. How are their parents still able to claim them as dependents for the AOTC? Do they just make that much more money that me–or maybe the parents aren’t claiming the kids. Any thoughts?
He/she could make as much money as he/she can; as long as the child does not provide more than half of his/her own support; the parents still could claim the child as dependent & AOTC.
I think earning money is one thing, actually spending it on your own support another.
What if an older child lived with you and saved all their earnings and you still paid for all of the housing costs, food, car insurance, cellphone, health insurance?
“How are their parents still able to claim them as dependents for the AOTC?”
They’re often not able to. Not because of the income, but because many students working internships/co-ops pay for their living expenses out of their own pockets – which can result in them providing more than 50% of their own support.
That’s my situation. 2015 was the last year my parent will be able to claim me because I’ll be interning for longer than I’ll be at home (also on a full ride all the way up to COA, so there’s no opportunity to claim AOTC anyway. But the dependency status will be changing.)
I also thought it had to do with some of the intangibles, but my CPA assured me even those things have dollar values attached. So if I were choosing to let my adult child live with me and provide any number of services so she could save her money, there would come a point when the IRS would object to someone with a salary higher than my own being claimed as my dependent.