Don't Beat me up!! Full Time Student Question

[MAJ]

Ok. So, Single mom has 2 children. One 10 & one 19. The 19 year old is a full time student but has wages ($13k). He also had a grant for college ($6k). He lives home and the wages do not qualify as being able to pay for his own well being. We are talking NJ here and that should be in its own category. Highest everything - Insurance - Electricity - Why am I here in this State??? He can't rent a bungalow for $13k with utilities!

Anyway -- Is it real cut and dry - Relatives cannot make more than $3,650. What is the true cut off for a child dependent? I'm looking at TTB Section 3 - pages 14-15. Can he still be considered a dependent?

Wait - it gets better .... Of course it makes a ($1,800) difference on her EIC (she has wages of $35k - no raise in 3 years - just wrong).

So! I want to make sure this is 100% right - on the books right and my due dilegence covered. She thinks she can claim him just because he's a full time student. We went round and round - But I told I can. She will go either way - I've been doing her taxes for 5+ years. She's so insistent she has me 2nd guessing.

From what I know it appears she cannot claim him - WIth the grant & wages he almost hits $20k - Not that he saw any of the grant monies. Rent alone in NJ would be more than $13k - never mind utilities, car insurance,, gas.. I know the IRS could give two cents.

[solomon]

Are you sure the grant would be taxable? Regarding the student providing more than half of his support, you should use the support worksheet which you can find in Pub. 501 or 17. Ball parking numbers would not suffice on audit.

[rgtaxservice]

Just at a passing glance it looks to me like son provides over one half of his own support. Mom's 35K divided by 3 is almost 12 K. Son definitely provides more than half of that - 13K (less taxes and FICA). Scholarship doesn't come into play.

The only way this works is if son banked most of his money. Mom has to be made to understand that support includes everything - including entertainment. Sure she slaved away paying rent, buying food, and taking care of son's needs....but the son also spent 13K (less taxes & FICA) on himself - fast food, car insurance, general walking around money. In essense, his support also consisted of another 13K which Mom did not provide.

Prove it to the mom by completing a Dependency Worksheet. Like I said in the beginning - just with the quick math. At 35K a year with 3 people, each person is 12K. Son only mneeds 6K to provide over half.

The sad part is that on paper - and that's what counts - 13K looks like alot of money, but it's only $250 a week...before taxes.

[Gretel]

She might not be able to claim him as dependent (but maybe she will dependent on much total tuition etc was) but she surely can claim him for EITC, since this credit doesn't care if he paid over half of his support himself.

[oceanlovin'ea]

Maybe I'm wrong

but I thought as long as your child was in school under the age of 24, you claim the child. '

I remember years ago sometimes parents would say "oh, let him claim himself so he can get some money back" but then the laws changed and the parent had to claim the child if they were a student.
I didn't remember there being anything about how much money they made.

Most kids are using the money on cars and recreation and not their support. Mom probably is supporting him.

Like I said, I may be wrong on this and will welcome being straightened out.

Linda, EA

[appelman]

Qualifying child may not pay more than half of own support.

The $3650 applies only to a qualifying relative. But let's get the arithmetic right. If Mom contributes 12K, son will not be disqualified unless he uses more than 12K. I.e., if he banks 1K of his 13K, he's home free. And his withholding might even provide an enforced savings!

[RitaB]

Another consideration

Agree, you need to do the worksheet.

Also, Mom may have other sources of cash besides the 35K of wages. Savings, inheritance, borrowed funds, maybe robbed her own retirement account. (Of course, you would already know if she withdrew retirement, but I digress.) Maybe Granny gave Mom money to pay some bills.

Yeah, it's a long shot, but you can't assume that Mom only had 35K at her disposal. You also cannot assume that she spent $12 per person in the household.

I have one girl and two boys. The girl costs more than the boys combined. Trust me.

[solomon]

... but then the laws changed and the parent had to claim the child if they were a student.

Linda, EA

Not really - the parent can choose not to claim the student. However, if the parent does not claim the student, the student can not claim him/herself.

Regarding how much money the student makes isn't relevant - it is relevant how much is used for the student's own support.

[rgtaxservice]

Most kids are using the money on cars and recreation and not their support. Mom probably is supporting him.

Recreation would be lumped in with support. Basically any monies you spend on yourself are support. If the kid spends $10K on video games and playstations - he's supporting his recreational habit. That's 10K that Mom doesn't have to shell out.

Support goes beyond just providing room and board.

What about the 30 year old that lives at home and brings home $30K a year? Parents provide a roof and food. The 30 year provides over half of his own support.