YOu still claim the dependent as such ifyou qualify, as that has not changed. What has changed is that you don't get the monetary dependent exemption, is all.
If you don't claim the dependent, then you can not claim any of the education credits for that dependent either. Worse, the dependent can't claim them either. Those credits are just lost and gone. Period.
We are supporting our son in University at about a 70/30 rate
I don't see why that matters. If you read IRS Publication 17, you'll see that there is no requirement for the parents to provide any support to the student what-so-ever. Not one single penny. The support requirement is on the student, and only the student. Basically, it reads as follows:
If the student did not provide more than 50% of the student's own support, then the parents qualify to claim the student as a dependent on the parents tax return. Scholarships, grants, 529 funds, gifts from Aunt Mary, etc. *do not count* for the student providing their own support.
Now with that said, there are only two possible ways the student can provide more than 50% of their own support.
- The student has a job or is self-employed and earns at least half of there necessary expenses in the same tax year those expenses are paid. Necessary expenses are things like qualified education expenses, room, board, food, clothing, transportation, and a few other things. Costs incurred by the student for thigns like a Caribbean Cruise over spring break and a trip to Vegas during the summer are *not* support costs, any way you look at it.
- The student has sufficient student loans on which the *student* is the *primary* borrower, and a sufficient amount of that loan money is distributed to the student in the tax year so as to pay more than 50% of their support not covered by other things such as scholarships, grants, 529 funds, etc.
So with that, it is perfectly possible for a student to earn or borrow a million dollars in the tax year, and yet still qualify to be claimed as a dependent on the parent's tax return.
Understand also that the key word in the publication is *qualify*. There is nothing that says the parents absolutely must claim the student as a dependent. But if the student "QUALIFIES" to be claimed a a dependent on the parent's tax return, then the student can not claim any of the education credits.
Finally, under all circumstances, your student will qualify for their $12,000 personal exemption. Nothing cancels that out.
