Whose address do dependent college kids use to file taxes?

[cameo674]

Our two college age daughters attend school in Indiana and maintain their residency there via my eldest's apartment, but we pay for about 98% of their living and school expenses.  They do have Indiana Driver's Licenses.  In the summer, they do come to our Ohio home for roughly 11 weeks. We moved to Ohio after they started college in Indiana.  We claim them as dependents.  I want to know what address they should be putting down on their taxes.  Should they use their Indiana address, or our address in Ohio?  They each make less than $8000 a year before taxes between the two states.

[Hal_Al · Accepted solution]

Use your address.

A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, even if he/she has more than the $4000 income limit, 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

3. He lived with the parent (including temporary absences such as away at school) for more than half the year

In order to be your dependent, they must live with you and their time at college must only be considered  a temporary absence. That doesn't mean they can't use another address for mail. But, if they use your address that's one less "red flag"

[JHUstu]

I realized after the fact that I filed my daughter's taxes incorrectly this year. She was 23, and I let her claim independent but we supplied more than half of her income. But she also put down her school addresses (she moved during the year) as her permanent address. Can I still file an amended tax return now claiming her as a dependent on our tax return and on hers but changing her addresses to our address or will this be a red flag? THe other bigger problem is that since she claimed independent then she also received a stimulus check which will have to be reported. Please help. The main reason about changing to dependent is so that she can stay on her health plan.

[Hal_Al]

@JHUstu 

Simple answer: Yes, you can  file an amended tax return,  claiming her as a dependent and probably claim the tuition credit and maybe more EIC. That, of course, assumes she qualifies as your dependent. And, as you apparently know, she will also has to file an amended return, checking the box  that she can be claimed, as a dependent. Depending on why she filed, there may be other details that need to be amended.

Why did you “let her” claim independent?  With the tax law change, effective 2018, most students will get the same refund whether they claim themselves or not. The personal exemption has been eliminated and the standard deduction increased.  Did she claim the tuition credit? There's a new urban myth among college students that says they can get a $1000 from the government just for filing a tax form. For most of them, they simply aren't eligible. A full time, unmarried student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working. You cannot be supporting yourself on parental support, 529 plans or student loans & grants. She can’t get that $1000, even if she is not your dependent.  She can get the nonrefundable education credit or deduction, 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. Only a QC qualifies a taxpayer for the Earned Income Credit (EIC). See full rules at: https://turbotax.intuit.com/tax-tools/tax-tips/Family/Rules-for-Claiming-a-Dependent-on-Your-Tax-Ret...

Does she meet the residence test? In order to be your dependent, she must live with you and her time at college must only be considered a temporary absence. That doesn't mean she can't use another address for mail.

The income limit for a qualifying relative is $4200 (2019). So, she may still be a dependent even if she permanently moved out and can not be a qualifying child.

If she files an amended return, she doesn’t need to change her address (it’s only her mailing address).  She doesn’t need to pay back the stimulus payment, unless the IRS asks for it (unlikely), if she will not be your dependent in 2020 (she turns 24 and can no longer be a QC) "In essence, the stimulus check acts as an advance of your 2020 income tax refund. This means when you prepare your 2020 income tax return, there will be a line to include the section 6428 credit. The credit on your 2020 return is subtracted by any amount received as a stimulus check in 2020. If the amount you received as a stimulus check is less than the credit you are due, the difference will be included as part of your 2020 refund. If you have been overpaid by receiving the stimulus check, however, you will not be required to return any excess amount".

“The main reason about changing to dependent is so that she can stay on her health plan.” Have you checked with your plan. It’s my understanding they can be on your plan through age 26, even if they’re not your dependent (Reference: https://www.hhs.gov/healthcare/about-the-aca/young-adult-coverage/index.html#:~:text=Under%20current...

[JHUstu]

Confused! If my child goes to school full time, and works during the summer in the city of her college, can they still file as dependent (they are not living with me)? Also filing my child on my tax return will not raise or lower your benefit from the IRS. Where it will maybe lower it will be in the state tax return.

So, you are saying it is ok to leave the two states on the tax return where they went to college? My child had to pay taxes in one of the taxes where they worked. So if I file an amended return to claim my child as a dependent, ( I will get not benefit from doing this, except maybe in the state), I can keep the two addresses on the tax return as they were previously filed as you are saying they are only being used as a mailing address? The problem is that they have to pay taxes to the state where the income was earned, and Turbo tax automatically assumes you are a resident of the state where you mailing address is on the tax return. Therefore you cannot do that as don't you have to be a resident of the state where your parents reside?

[Carl]

I removed my response in this post because it was directed at the original poster that started this thread, and the original poster's questions were already answered.

[Hal_Al]

@JHUstu 

You cannot claim your daughter as your dependent.  She does not meet the Qualifying Child Rules since she does not live with you. She does not meet the Qualifying relative rules because (I assume) she makes more than $4200 for the year. 

So, you did NOT file your daughter's taxes incorrectly this year.

 You seem to be introducing new questions about state taxes:

Q. So, you are saying it is ok to leave the two states on the tax return where they went to college?"

A.  You child is now a resident of the college state, since she stays there in the summer.  You also say she moved there in 2019. She files as a part year resident of both states.

Q. I can keep the two addresses on the tax return as they were previously filed as you are saying they are only being used as a mailing address?

A. There will be no amended returns, so the question is moot. But, you only put one address on a return (where you live at the time you file or where you want the IRS to contact you).

Q. The problem is that they have to pay taxes to the state where the income was earned, and Turbo tax automatically assumes you are a resident of the state where you mailing address is on the tax return.

A. Not exactly. You first tell TT, in the personal info section,  which state you are a resident of (it does not go by the address you enter), then you tell it if you had income from another state. Or, in your daughter's case, that you moved during the year.  In the state(s) interview you will be asked  to confirm residency.