Can I claim my son as a dependent if he is on an Athletic Scholarship?

[Sunkee]

My son receives a 1098-t for his scholarship. Line 5 is greater than line 1 by over 25k. I understand that the 25k is taxable. I'm trying to find out what counts as him providing support for himself. Does the 25k he receives from his scholarship count as him providing support for himself? He is under 23 and a full time student. I've checked out Pub 501 and 970 and it still isn't clear to me if I can claim him as a dependent. He does live with me when not attending school. I do pay for all his expenses when he is home from school along with medical and other expenses.

[Bsch4477]

Scholarship income does not count as support for the determination of dependency. 

[AliciaP1 · Accepted solution]

As Bsch4477 states scholarship income does not count as support when attempting to claim a dependent.  

What does "financially support another person" mean?

One requirement to claim a dependent is that you must provide more than 50% of their support, which is the cost of basic life necessities such as food, lodging, clothing, medical and dental care, education, transportation, utilities, and so forth.

To determine this, compare how much you spend on this person's necessities with how much they (or somebody else) contributes.

• Divide per-household costs like utilities, groceries, and lodging by the number of household members to determine the per-person cost
• If your mortgage is paid off, use the fair rental value of your home to figure the lodging expense

If you are paying more than 50% of another person's necessary living expenses, you financially support that person.

See Who can I claim as my dependent? for more information.

@Sunkee

[Hal_Al]

Q.  Can I claim my son as a dependent if he is on an Athletic Scholarship?

A. Yes.

Q. Does the 25k he receives from his scholarship count as him providing support for himself?

A.  No. In simple terms, it is third party support and not support provided by either the student or the parent. Technically scholarships are excluded from the support calculation*. 

There are two types of dependents, "Qualifying Children"(QC) and Other ("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. Only a QC qualifies a taxpayer for the Earned Income Credit and the Child Tax Credit. They are interrelated but the rules are different for each.

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.

A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:

1. He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled
2. He did not provide more than 1/2 his own support. Scholarships are excluded from the support calculation. Note that the support test, for a QC, is only that the child didn't provide more than half his own support. 
3. He lived with the parent (including temporary absences such as away at school) for more than half the year

*Scholarships and support  https://ttlc.intuit.com/community/college-education/discussion/re-calculating-support-with-scholarsh...

[Bsch4477]

One clarification in the interest of accuracy to an otherwise excellent reply. As previously stated, if your son is a full time student under age 24, the rule is that he cannot provide more than half of his support (rather than you have to provide more than half of his support).