Working student

[CPS Tax Services]

20 yrs old, part-time student during 2018, worked in 2018 & earned $31,161, has her own health insurance & lived with parents the whole year & paid her own college & tuition expenses. Even though she lives with parents, does she has to file her own tax return , and claim her AOC? I know she goes over the standard deduction, but can she be claimed as dependent by parents? How does this has to be filed? Thanks!!!

[spanel]

You have already answered your own question. She paid her own college, she made WAY to much. She will file with the AOC credits. (of course she would have to file her owe return making $31161!!)

chris

[Lion]

What is the situation of the parents? In my pricey area, parents in the 2.5MM home with the $50,000 car their kid drives and the car insurance and the clothes and the vacations and the food and the electronics and...and who make over $1,000,000 as a couple, often still pay more than half the support of their college kids. You need to ask some questions, and maybe fill out a support worksheet with them if it looks close. (Keep it in your file, no matter which way it comes out.) If the student DOES pay more than half their own support, then the student is NOT a dependent of the parents. Either way, the student files her own tax returns. You just need to determine if she checks the box that someone else can claim her as a dependent or not.

[kathyc2]

Lion, OP said part time student, so wouldn't qualify as dependent based on that.

[Lion]

Oh yeah, good catch, Kathy. She would need to be at least half-time for any part of five months to be a dependent, right? Or, is it full-time/five months?

[Dude]

Lion, OP said part time student, so wouldn't qualify as dependent based on that.

If at least half time for 5 months of the year then they are a qualifying child. Ask if expenses were paid with a loan co signed by parents. You want to explore the choices available so that the party with the higher net tax benefit will get it. As it looks now either the parents can claim or the student could claim themselves. Again, see who benefits most

[kathyc2]

If at least half time for 5 months of the year then they are a qualifying child. Ask if expenses were paid with a loan co signed by parents. You want to explore the choices available so that the party with the higher net tax benefit will get it. As it looks now either the parents can claim or the student could claim themselves. Again, see who benefits most

Nope. Need to be a full time student 5 months to be a qualifying child. The at least 1/2 time is the qualifier for AOC.

[Dude]

Nope. Need to be a full time student 5 months to be a qualifying child. The at least 1/2 time is the qualifier for AOC.

Thanks for pointing out another trap:

Like the QBID/1099 issue and claiming a parent who is on medicaid as an independent, AOTC is a potential trap:

The big payoff for AOTC is the $1400 refundable credit. Child that drops below full time spring and fall (on purpose or not) is not a QC and if they have a 10 hr part time job they dont qualify as QR. Parents claim AOTC because 1098 T only indicates student is at least half time. Parents probably have no idea student dropped below full time.

Parents on the hook to repay the $1400 with interest because child was not QC and non eligible to be claimed.

[Rapid Robert]

If at least half time for 5 months of the year then they are a qualifying child. Ask if expenses were paid with a loan co signed by parents. You want to explore the choices available so that the party with the higher net tax benefit will get it. As it looks now either the parents can claim or the student could claim themselves. Again, see who benefits most

That's nonsense. Whether or not someone can be claimed as a dependent is never a choice, it is determined by the facts. And being a half time student under age 24 for at least five months does not, alone, determine whether one is QC. The person must also not provide half or more of their own support. See Pub 501 for a more complete understanding of the support test.

[Dude]

That's nonsense. Whether or not someone can be claimed as a dependent is never a choice, it is determined by the facts. And being a half time student under age 24 for at least five months does not, alone, determine whether one is QC. The person must also not provide half or more of their own support. See Pub 501 for a more complete understanding of the support test.

It is indeed a choice a choice made by the person who has the right to claim the child. That is why divorced parents can allow a non custodial parent to claim their child for CTC. Also, a 19 year old who is not a full time student (not at least half time as KathyC pointed out even though the 1098t misleads) cannot be a QC. This ALONE disqualifies. You cannot come back with the argument that you provided over half the support. Furthermore, if they worked 5-10 hours on campus they cant even be a QR.

[CPS Tax Services]

Thank you everyone for your help on this one. I'll need to verify couple of your suggestions with taxpayer. At the end, doesn't matter if she files for herself and don't check the box that someone can claim TP as dependent?

[Dude]

Thank you everyone for your help on this one. I'll need to verify couple of your suggestions with taxpayer. At the end, doesn't matter if she files for herself and don't check the box that someone can claim TP as dependent?

after that box is a box that asks "did this person claim you as a dependent". Also, don't forget. AOTC was designed for the parents benefit not the student. If the student files as a non dependent they must disclose if the either parent is alive. If so, they dont get the refundable portion of the credit. That being said, I bet alot of students filed for themself and took the credit undeservedly.

[kathyc2]

Dude:

Max refundable for AOC is 1,000. The 1,400 refundable is for CTC. The 1098T does not "mislead". It reports at least halftime because that is the criteria for claiming AOC.