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moondoggy
Returning Member

Utma for tuition

My daughter is 21, reached majority age for UTMA in MI, and used the funds from her UTMA account to pay for college tuition, room and board.  Because my daughter has reached majority age and the UTMA  has now transferred to her does using the UTMA funds to pay for tuition, room and board count toward determining whether I provided half of her support and can claim her as a dependent on my return?

1 Best answer

Accepted Solutions
Hal_Al
Level 15

Utma for tuition

Yes.  That would be true whether she reached majority or not. Even before age 21, the UTMA funds are considered hers for tax purposes. 

But the support rule, for a full time student child, under age 24, is not whether you provided more than half her support, it is whether she provided more than half her own support. Scholarships are considered third party support and not support provided by the student.

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 considered third party support and not as support provided by the student.

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

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.

View solution in original post

1 Reply
Hal_Al
Level 15

Utma for tuition

Yes.  That would be true whether she reached majority or not. Even before age 21, the UTMA funds are considered hers for tax purposes. 

But the support rule, for a full time student child, under age 24, is not whether you provided more than half her support, it is whether she provided more than half her own support. Scholarships are considered third party support and not support provided by the student.

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 considered third party support and not as support provided by the student.

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

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.

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