My son grad from college in 2016 and started employmnt on 7/10. If I claim him as dependent to receive the education tax credit, can he claim himself on his tax return?

[jimfriss]

I have claimed my son as dependent his first 3 years of college and received the educational tax credit each year. As my son started working on July 10, 2016, he will be submitting a tax return this coming spring. If I once again claim him on my tax return to receive the educational tax credit, can my son also claim himself on his tax return (but not to receive the educational tax credit)?

[DoninGA · Accepted solution]

Assuming the he is under the age of 24 on 12/31/2016, you should be able to claim him on your tax return as a dependent under the Qualifying Child rules if he meets all the requirements.  The Education tax credit would be entered on your tax return if you are claiming his personal exemption.

He can file his own tax return, but if you claim his personal exemption on your return, he must indicate on his tax return that he can be claimed as a dependent on someone else's return.  He cannot claim his personal exemption on his return.

To be a Qualifying Child -

1. The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.

2. The child must be (a) under age 19 at the end of the year, (b) under age 24 at the end of the year and a full-time student or (c) any age and permanently and totally disabled.

3. The child must have lived with you for more than half of the year. Temporary absences while away at college are considered living with you.

4. The child must not have provided more than half of his or her own support for the year.

5. If the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child. 

6. The child must be a U.S. citizen or U.S., Canada or Mexico resident for some portion of the year.

7. The child must be younger than you unless disabled.

[Hal_Al]

No; you cannot claim the education credit if your son claims himself on his tax return. The education credit goes to the person claiming the student's exemption; whether that be the parent or the student himself. This is true regardless of which of you actually paid the tuition and other qualified expenses.

The question not asked is can he still be claimed as a dependent, now that he has graduated and got a full time job.

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 2016.

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