college student

[oceanlovin'ea]

Client's son is in college, actually started med school in fall. He graduated from 4 year degree in May or June.
My question is regarding claiming him as dependent. I think we are fine for 2009 because the first 5 months he was in university getting 4 year degree. Now he is in medical school at USF.
He was going to have to take out student loans to pay for medical school, but his father is a reservist who has been on active duty for past 10 years or so. The government made an allowance recently that allowed personnel to transfer their education allowance to another member of family if they did not plan to use it. There were some stipulations and for this family they fell into the right slot at the right time. I think it includes housing too.
So the army is paying for his medical school for a couple of years, I think. And he doesn't have to pay anything back.
So since parents don't technically pay for any of his expenses but he is still in college, can they still claim him as a dependent?
They do help him out when necessary. For example, his mother gave him her Toyota Highlander (which is like new, considering how she takes care of her vehicles) and she bought a new Toyota Truck.
Thanks
Linda

[Chief]

What is the age of the student?

Linda, the age of the student will determine that.

[oceanlovin'ea]

He is 22 years old.

Linda

[Koss]

Qualifying Child or Qualifying Relative?

Boy, that's a good one...

First of all, you indicated that the US Government made some changes that "allow personnel to transfer their education allowance to another member of the family." That tells me that the father elected to transfer his educational assistance to his son. There may not be any precedent for this sort of thing. But if the assistance is transferable, then the father has a property right in it, and he has given it to his son. It is at least arguable that this is a form of support.

But let's forget about that for a minute. Really. It's Twilight Zone, Alice-in-Wonderland stuff.

Let's look at the tests for a qualifying child.

The 22-year old med student is:

(i) a full-time student under the age of 24
(ii) the biological child of the taxpayer, and
(iii) he is not providing more than half of his own support.
(Whether the support comes from the parents or the Department of Defense is irrelevant.)

That's three out of four.

What about residency?

Before he started medical school, was he living at home?

Was he living in campus housing during his undergraduate years, and coming home each summer?

Did he ever change his driver's license address, or his voter registration?

Hmmmm?

The residency test is satisfied if he is living away from home for the purpose of attending medical school. It's a temporary absence.

If you take the position that he has permanently moved out of his parents' home, then you have a different question. He's no longer a qualifying child, and to be a qualifying relative, the parents do indeed have to provide more than half of his support.

BMK

[Koss]

Support Test

According to Pub. 17, when applying the support test for a qualifying relative,

The following items are not included in total support.

1. Federal, state and local income taxes paid persons from their own income.

2. Social security and Medicare taxes paid by persons from their own income.

3. Life insurance premiums.

4. Funeral expenses.

5. Scholarships received by your child if your child is a full-time student.

6. Survivors' and Dependents' Educational Assistance Payments used for the support of the child who receives them.

So even if he is not living at school temporarily, he appears to be a qualifying relative. The scholarships and/or educational assistance he is receiving are not treated as support provided by the student, or by the parents, or by the government. They are not treated as support at all.

BMK

[oceanlovin'ea]

Questions

First of all, for the year 2009 he was a full-time student getting his degree. So for 5 months of the year he was in school and qualifies as their dependent.

I was just thinking ahead to 2010 since he will be in medical school for the whole year. He will be 23 years old (still qualifies age requirement)
He lives on campus as it is too far to travel with early morning classes or evening classes. He does come home some weekends or breaks. He comes home during summer if he is not taking classes.

Home and school are both in Florida. Don't think he changed address on DL.

He worked a little in 2009....maybe 4 days out of the month. He worked at hospital in transport and had to work at least 1 day every month to stay on active list. So he would do that and sometimes a little more. But not even standard deduction amount.

Father says it was his entitlement to college that he gave to his son so in his eyes he was supporting him. But as you said it isn't considered support.

We have lots of time to mull this one over...a whole year. But it is nice to plan ahead.

This boy has lived next door to me since he was 8 months old. I hope he finishes school soon and picks a field that will help him take care of me when I am old and gray. Oh, wait.....I AM old and gray.

Linda