<p>A neighbor’s son just graduated with a degree in Criminal Justice. He had wanted to be a State Trooper but they’re not taking in any new classes now. He’s applied with the National Parks police and US Customs, but with the latest federal budget deal I doubt any federal agencies will be hiring.</p>
<p>I’d like to whack some Tea Party folks upside the head with a textbook labelled “BASIC ECONOMICS” but I shall button my lip and not make any further political comments. I am fortunate that no one in my home works for a government agency (federal, state or local) or in a company that depends on gov’t contracts.</p>
<p>I’m so happy for ema and HPuck’s son. I think the time has come to concentrate on Tax and retirement planning.</p>
<ol>
<li>Make sure that you take advantage of 401k matching if the company offer.</li>
<li>Even if the company don’t match 401K saving it is benefitial to deduct as much as possible. A $100 contributed now will become $1000 after 45 years at 5% interest compounded.</li>
<li>While filing the W-4 maximize the allowances so that you don’t over pay taxes.</li>
</ol>
<p>Speaking of taxes… when our S got a his job and was filling out his W4 I realized: we’re losing a tax deduction! :eek: Everyone talks about saving money when the kids become independent, but I wonder how much more its going to cost us without him as a tax deduction. :(</p>
<p>I had a hard time figuring that out, and it looks like with my health insurance and rent increases factored in, I am $60 short for moving out of my parents house-- so I really don’t want to pay more than I have to. The first one I did count, and that was if no one else could claim you as a dependent. But then my dad and I were debating whether or not I could also do the second one, since one of the options was “if you are single and have only one job” – I didn’t end up picking that one because my dad was afraid I’d end up owing money.</p>
<p>Is there a maximum a student can earn before paying tax? This year my kid earns quite a bit of money, more than previous years, so I just wondering if there is a limit before she has to pay any tax.</p>
<p>The accountant said that if student earns at least $600, our non-profit would have to file with IRS for that individual.</p>
<p>That said, S earned $5K with NASA but they reported it as a scholarship & he didn’t pay tax on it as it was less than his share of tuition. </p>
<p>I’d say check with bookkeeper or accountant to be safe. If you don’t have one, check out turbotax or whatever program you use & play around with different numbers to see.</p>
<p>I’ll probably use Turbotax since I’m the accountant. She earned more than $8K, I wonder if I can still claim her as my dependent. I guess If I still pay for her tuition so that should be ok.</p>
<p>If you’re paying more than 1/2 her expenses & tuition, she’s still dependent on you, so you should still be able to claim her. I’m pretty sure that whomever paid her the $8K has reported it & IRS will chase her if taxes aren’t paid. That’s quite an income for a college student–probably more than both my kids earned all their years in college combined! Congrats!</p>
Earned income of $5700+
(taxable scholarships or fellowship grants are considered Earned income)</p>
<p>DrGoogle, I’m pretty sure you can still claim her as a dependent. Publication 501 has the details but basically if she’s under 24 on 12/31, if she was a full-time student for at least part of any 5 calendar months, if she lived with you more than half of the year, and if you provided more than 50% of her support, she’s your dependent. She can be considered to live “with you” even if she’s temporarily away for education. </p>
<p>Our son started a full time job 8/1 and moved into a new place 200 miles from us. I pored over publication 501 and came to the conclusion that not only could we claim him, but even if we chose not to claim him he cannot claim himself. (You can’t claim yourself if someone else COULD claim you). He’s 22, was in college from Jan - May, and lived “with us” until moving out on July 30. Add to that, we paid his tuition and living expenses from 1/1 through 7/31. </p>
<p>But next year, he can claim himself and we cannot claim him.</p>
<p>I don’t mean to suggest she is not going to pay tax because it’s not reported, but every year because her earnings were in the lowish range, 2-3K at most, I don’t think she ever paid any income tax. She got back every cents that were withheld from her paycheck.</p>
<p>^^^Lafalum
I think you may be wrong about the IRS rules - we have the same issues as you (May grad; job starts now). I think the key statement in pub 501 occurs in the “age test” section for dependents on page 11 of the pdf document.
I read bullet number 2 “at the end of the year” to mean at the end of the tax year (i.e. 12/31/11) so we cannot claim our S (and thus he can/will claim himself).</p>
<p>Very good news here. My d. with the high-paying internship at KPMG has been offered a full-time position, to begin just as soon as she finishes her masters degree this year. Frankly, I’m not all that surprised (she having been their top recruit in the area), and all her evaluations were stellar.</p>
<p>They sent out on a boat ride with management last night.</p>
<p>MSMom&Dad, I initially thought the same thing. But after further review, I read it: At the end of the year, on 12/31, my son will be 22, which is under age 24. He will also qualify as a full-time student because he was enrolled in college for at least part of 5 months during 2011. He doesn’t have to be a full-time student on 12/31. </p>
<p>If you dig further down in the publication you’ll see the rules on what qualifies someone as a full-time student:
</p>
<p>So a full-time student for any part of any 5 months of the calendar year qualifies as a full-time student for the year. Personally, I think it would be clearer if they wrote “A full-time student for at least 5 months of the year, who is under age 24 at the end of the year…” But digging thru the publication, I’m pretty sure that’s what they meant.</p>
<p>She’ll support me to do the work I need to do. (But, at least for now, her career plans for work in international development still hold. We;ll see.) Could turn evil, though. It has happened to others. (though especially white males, between the ages of 45-65, who simply can’t be trusted. Since she’s a minority female, her odds are better…)</p>