Child graduated college in May, no longer dependent in 2017, can parents claim 2017 tuition?

[DanielV01]

If the child does not qualify as a dependent, then only he or she will claim any educational credits.  The parents may only claim any tuition or education expenses when they are also claiming the student as a dependent.  However, the student needs to be certain they cannot be claimed by the parents.  This would be true if:

• Student turned 24 before December 31, 2017
• Student earned more than $4050 in income in the year.

If the student was still younger than 24 as of December 31, 2017, then they would not be their parents' dependent if:

• They lived at home for less than 6 months (school is considered living at home.  The student lived at home at least 5 months.  After school, if the student did not return home, the student then moved.  Otherwise, student would be living at home until he or she did finally move).
• The student provided at least half of his or her own support.

Yes, the student graduated.  However, since the student was in school for 5 months, he or she can still be a dependent, and, if so, would best allow his or her parents to claim tuition expenses.

If the student was not a dependent, however, the student should claim the expenses.

[Bsch4477]

You sure she is not your dependent?  Did the child attend school full time from Jan-May and was sunder age 24?

[dandeb50g]

under 24 yrs old, college full time Jan thru May, moved out of state for new job in June, doesn't meet 2017 dependent since only lived with parents 5 months, but parents supported Jan thru May and paid tuition

[DanielV01]

@dandeb50g.  Please see my answer.  It is best for the student to claim if the parents cannot claim as a dependent.

[Bsch4477]

Since student did not live with you more than half the year, the student should claim the education expense even if you actually paid it as suggested by dandeb50g.

[DanielV01]

For additional information, you may click on this link for the IRS guideline (nice chart that explains):  <a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p970#en_US_2017_publink1000204381">https://www.irs.gov/publications...>

[Oli98]

Hi I graduated in May 2020, moved back home to NY and started a new full-time job in CA on July 7, 2020. Am I still considered living with my parents for more than half-a-year? My parents can claim me as a dependent?

If this is the case, my parents can claim my tuition, right since they paid.

Thanks.

[Hal_Al]

Q.  Am I still considered living with my parents for more than half-a-year?

A. Yes.  The time at school is a temporary absence, so you were considered as living with them for that period.

Q. My parents can claim me as a dependent?

A. Yes, probably. See answer below, written as if the parent asked that question.

Q. If this is the case, my parents can claim my tuition, right since they paid.

A.  Yes, but not  because they paid.  The education credit goes with the student's dependency.

Graduation year

If he/she was a student (under 24) for at least 5 months and lived with you for more than half the year, and did not provide more than 1/2 his own support for the whole year, you can still claim him. Be sure he knows you're claiming him, so he doesn't claim himself. He can only be claimed once. But, he can "file taxes" without claiming his own exemption.

The real question is who should be claiming him in this "transition" year to adulthood. You two have to agree on who is going to claim his exemption. Each should do their taxes both ways and see which way the family comes out best.  Even then, you have to meet the rules. The rule is that a child of a taxpayer can still be a “Qualifying Child” dependent, regardless of  his income, if:

1. he is a full time student under 24 for at least 5 calendar months of the year (graduating in May usually means you meet the 5 month rule)
2. he did not provide more than 1/2 his own support  (scholarships are considered 3rd party support and not support provided by the student). 
3. lived with the parent (including time away at school) for more than half the year

So, it usually hinges on  "Did he provide more than 1/2 his own support in 2020.

The support value of the home you provided is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants. IRS Publication 501 on page 20 has a worksheet that can be used to help with the support calculation. See: http://www.irs.gov/pub/irs-pdf/p501.pdf

2020 has an additional wrinkle: If  the student qualifies as a dependent, they don't get the $1800 stimulus/rebate credit. 

Under the CARES Act, if you are claimed, or qualify to be claimed, as a dependent on someone else’s 2019 return you did not receive a stimulus check, in 2020.   If you qualified as a dependent for 2019, but will not be for 2020, you will most likely get it in 2021, when you file a 2020 tax return.

[Oli98]

Thank you so much for your quick reply.

Another question - is there an income limit for me to be qualified to be my parents' dependent? What if I earned $40,000 between July - December?

[GhengisK]

I too have a 2020 undergrad college graduate who as in school thru May 2020.. We (parents) paid tuition minus loans and scholarships.  

When it comes to calculating support for the full year, for sure the college tuition adds up to more than 1/2 of what he would have paid to support himself even if he moved away right away (he did for a 5 months but then came back for 2 months ).   I was thinking him paying us rent for that time back home would keep us on the right side of this but if I have to include all the expenses while he was still in school,  he will have to be our dependent.     This means, of course, he won't be eligible for the 2 Covid-19 stimulus payments he would have gotten in 2020 (didn't since he was clearly dependent in 2019)  and he won't be eligible for the proposed new payment in 2021.  

Am I thinking about this correctly  or is there some way he can legitimately be considered independent for 2020 without billing him for a good portion of the tuition ?    I was assuming I am done with the tax credits since we claimed the AOTC for 4 yrs already and can't claim tuition paid as a deduction any more thanks to tax law changes.    So the only benefit to me to claim him as a deduction is $500 I believe.   Him being independent would be far better financially due to the covid relief (his job was pushed off in time and he missed out on much salary for 2020 as it is)

Appreciate thoughts .   

[Hal_Al]

If you have used the American opportunity credit 4 times, you are still eligible for the Lifetime Learning Credit, which is 20% of tuition paid (up to $10,000). It is non-refundable.

You have already thought of all the possibilities. Retroactive payments for room, board and tuition might not meet the definition of legitimate.

[NeedGrace]

Confused STILL on the CARES Act Recovery Rebate.  In 2020, spouse & I had 2 college students fully dependent upon us.  

Student# 1:  Jan-June 2020 was full-time graduate student (age 23, turned 24 mid December 2020)
  Lived at home 100% of year, we paid for all living and support expenses.  *It looks like per the notes above that the exception of my Student#1 being 23 and in school full time at least 5 months would mean he was eligible as a dependent no matter what his income was.  Is this correct?  TurboTax form tells me he is not eligible, as he earned over $12k during the 2020 calendar year.

Student# 2: Full-time undergraduate 2nd year college student.  Lived at home 100% of year, we paid for school and all living and support expenses.  It would seem that we are still eligible for the Recovery Rebate - but the TurboTax form acts like spouse & I already received max for 2020 ($2400 & $1200) - yet TurboTax does not offer the "recovery rebate" option.  

Should i work independently with a tax preparer instead of TurboTax this year?

[Hal_Al]

There are two types of dependents, "Qualifying Children"(QC) and standard ("Qualifying Relative"(QR) 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.

Since student #1 turned 24 before 12-31-2020; he no longer qualifies as a QC.  There is a $4300 income limit for a QR. So, his $12k income prevents him from being a dependent for 2020. The good news is, he gets the $1800 recovery rebate credit (stimulus) when he files his 2020 return. 

Student #2 is still your dependent, but that has nothing to do with recovery rebate. There is no stimulus payment for children over 16  (there is in the current proposal but that's not part of your 2020 tax filing)

The stimulus question comes up in the review section of TurboTax. You will be asked how much of the first $1200 (each) you got, then the 2nd $600.  Whatever you didn't get will be added to your refund. 

Q. Should i work independently with a tax preparer instead of TurboTax this year?

A. Nothing you described would warrant that.

[NeedGrace]

Thank you!  I was asking about the 24 yr old because of the response 4 wks ago mentioning someone under 24 and in school for at least 5 mos of 2020, so I just wanted to make certain I understood.