Residency for College student

[LMoaney]

I have a friend whose daughter goes to college in Florida, they live in Maryland. Due to their income, they do not qualify for the Education credits. Therefore, they want their daughter to move off campus, get an apartment and start filing her own taxes as a Florida resident. This way they hope to also take advantage of the Florida in-state tuition cost versus the much higher out-of-state rate. I believe normally a college student would keep their "home" residency if the parents are claiming her on their taxes. However, this alternate plan seems to be a viable option. Does anyone know of any tax laws that would prohibit using this plan of action.

Thx

[gailtaxed]

It is my understanding of the federal tax laws that if the daughter is a dependent of the parents, she cannot claim herself even if they don't claim her. And if she cannot claim herself, she cannot claim the tuition credits. I have not looked this up specifically, however.

[LMoaney]

She doesn't want to claim the tuition credits. The purpose of the separate tax return is for residency purposes only.

[Jesse]

Dependency deduction is not a "choice". Most likely the Support test would be the determining factor as who would be allowed to claim child as a dependent.

However if neither parents or child claim the dependency exemption the child can claim the Hope or Lifetime Learning Credit and deduct any student loan interest, but I don't know if that will help take advantage of the Florida in-state tuition.

[LMoaney]

Thank you for the clarification

[Lion]

Residency

You'll also need to check FL's definition of a resident and her college's definition, too. Some colleges keep the student's residency the same as their high school graduation until college graduation, unless the PARENTS move. Does age of majority come into play in any of the definitions? Is it 18 or 21 or something else; how old is the student? Will the student supply more than 50% of her own support?

I had a couple who wanted CO residency for their college student. The University required 18 months or 24 as a non-student or maybe less than full time student of him living in CO and working and supporting himself. The parents hired a CO lawyer, set up their kid in an apartment, transferred assets into an account in the child's name, drove his car across country and re-registered it in CO, etc. It all worked out for them over time, but it seems to me they must've paid more to the lawyer, in delayed graduation with full employment, etc., than they ever saved in tuition. Their kid couldn't come home for visits longer than a certain number of days while trying to qualify as a CO resident for state college purposes, so the parents were paying two airfares to visit their son instead of just one if he'd visited his parents. He gave up his high paying summer job out here to work in a video store out there. Couldn't remain on his mother's health insurance. And on and on. By the way, the parents now go to a cheaper tax preparer.