19-year-old college student. I had 16k in income, 13.7k from unemployment. I supported myself over half but with unearned income. Do I still qualify as an independent?

[mikesalinas9]

I live with my mother, but the house is under my grandparents so we do not pay rent.

[ColeenD3]

No. If you meet the qualifications of a Qualifying Child, you can be claimed. However, one of the rules is that you didn't provide more than one half of your own support for the year. There is no rule that it has to be earned income. This will not preclude you from having to file Form 8615.

Qualifying Child

Relationship — the taxpayer’s child or stepchild (whether by blood or adoption), foster child, sibling or step-sibling, or a descendant of one of these.

Residence — has the same principal residence as the taxpayer for more than half the tax year. Exceptions apply, in certain cases, for children of divorced or separated parents, kidnapped children, temporary absences, and for children who were born or died during the year.

Age — must be under the age of 19 at the end of the tax year, or under the age of 24 if a full-time student for at least five months of the year, or be permanently and totally disabled at any time during the year.

Support — did not provide more than one-half of his/her own support for the year.

Form 8615 must be filed for any child who meets all of the following conditions.

1. The child had more than $2,200 of unearned income.

2. The child is required to file a tax return.

3. The child either:

   1. Was under age 18 at the end of 2020,

   2. Was age 18 at the end of 2020 and didn’t have earned income that was more than half of the child's support, or

   3. Was a full-time student at least age 19 and under age 24 at the end of 2020 and didn’t have earned income that was more than half of the child's support.

   (Earned income is defined later. Support is defined below.)

4. At least one of the child's parents was alive at the end of 2020.

5. The child doesn’t file a joint return for 2020.

[Carl]

Most likely what you're trying to do here is qualify for the stimulus payment. Don't go there. You can bet the IRS is paying special attention to college students who claim they don't qualify to be claimed as a dependent on another's tax return. The fact is, you "do" qualify to be claimed as a dependent.

In order for you to qualify to be independent, you must have provided more than half of your own support for the entire tax year. If you live with your mother, then there's no way possible that you provided more than half of your own support.

Additionally, that support is based on *earned* income.  That would be income reported to you on a W-2, or if self-employed on a 1099-MISC or 1099-NEC. Additionally, that earned income must be of sufficient amount to justify a claim to providing more than half of your own support.

I had 16k in income.

Was every penny of that "earned" income? I don't think it was. But if it was, there's no way possible that you provided more than half of your own support for an entire tax year with only $16K of earned income. The fact that you lived at home means that your parent(s) provided you housing. More than likely, they also fed you. All that counts as 3rd party support.

Take special note that there is no requirement for the parent(s) to provide the student any support. Not one penny. The support requirement is on the student, and only the student. Unfortunately, you don't meet that requirement based on the information you have provided.

[mikesalinas9]

@Carl, 

Thank you so much for the response! My mother and I do not pay rent because my grandparents own the house and still pay their mortgage. I was hoping this would give me an exception, since I know giving housing is more than enough to qualify for a dependent child.
Furthermore, I was confused because while I did have 16k in income, 13k was unearned so I did now know if that counted or if all of it needed to be earned. Thank you for clarifying me on that topic!

I help out with bill ever so often but am not required to thanks to my grandparents. I pay everything I can on my own, most of which is food, clothing, and my car. I haven’t asked my mother for a dime since I graduated high school since we are not very wealthy. I was hoping this meant I could qualify as an independent but after reading your answer I rather not even think about it, lol! Thank so much for your input and for warning me. Stay safe! 

[Hal_Al]

Yes,  you qualify as an independent if you provide more than half your own support, even with unearned income*.

But, be sure that you really provide more than your half you own support**. Scholarships do not count as your own support. Loans co-signed by your parents don't count as self support. The support value of the home, provided by the grandparent, is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants.

The IRS has a worksheet that can be used to help with the support calculation. See: http://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf

*You will not qualify for the refundable portion of the American Opportunity credit because your support was not with earned income, even if you qualify as a non dependent.

**There are two types of dependents, "Qualifying Children"(QC) and standard ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test. 

The support test is different for each type. The support test, for a QC, is only that the child didn't provide more than half his own support. The support test for a Qualifying Relative is that the taxpayer provided more than half the relative's support.

See full dependent rules at: https://turbotax.intuit.com/tax-tools/tax-tips/Family/Rules-for-Claiming-a-Dependent-on-Your-Tax-Ret...

There's a chance that you could be the QC of either  your Mom or your grandparents, since you live with all three of them.

[Carl]

As I understand it, $13.7K is from unemployment, while $2.3K is earned income. The unemployment income does count for you providing your own support. However, the total of $16K would be next to impossible to provide more than half of the support to a college student. You don't pay rent or utilities, and probably don't pay for food out of that $16K either.

Additionally, if the total of all third party income  exceeds $16K, that will nix any claim to providing more than half of your own support. Third party income includes cash and the fair market value of services provided by others (such as housing, utilities and food by your parents) as well as scholarships, grants and 529 distributions.

So could a college student make it for an entire year on less than $32K? Maybe. But more than likely not. It would depend on where you lived and attended college, if the IRS would buy into such a claim or not. Overall though, I fully expect the IRS will be looking closely at the tax returns of undergraduate college students who claim to provide more than half of their own support.

If you can support such a claim, then you're fine.