Dependency exemption for full time student age 24

[kamckinley]

I'm having trouble figuring out if the support test has been met for parents of a 24-year old grad student. She has no earned income. The parents provided $7,574 of support during the year. However, the student received $8,699 of scholarships and grants (as reported on her 1098-T) and the remainder of her expenses were covered by student loans (at least $2,500, but probably more). If the grants, scholarships and student loans are considered the student's funds, then the parents do not meet the support test in this example because the student provided $11,119 of her own support. Am I thinking through this correctly?

Thanks!

[kamckinley]

A little more info on this. After reviewing the cost of attendance for the school she is attending, her student loans must have been $12K or higher, bringing her total financial aid to over $20K. According to the parents they provided $7,574 of support, but this doesn't include the use of a car they provided or the one month that she lived at home.

The parents were fully expecting to claim her as a dependent this year, so I want to make sure I understand the rules correctly before I tell them they can't claim her. Thanks again!

[Lion]

If the student is 24, they can no longer be a QC. To be a QR, the parents must provide over half the support. It doesn't sound like they're close. But, make sure you work through a support worksheet, such as TTB 16-9.

[kamckinley]

I sent the support worksheet to the parents and asked them to fill it out. Interested to see what they come back with...

[taxea]

does she meet the "lived-with" test?

[kamckinley]

Yes, she meets the lived-with test, but after reviewing the numbers some more, it became clear that the parents didn't provide anywhere close to 50% of her support so no deduction.

Thanks for all the input on this one!

[Gary2]

Remember that when evaluating the support test for parents and children, scholarship amounts are omitted from the equation. That may or may not change your result.