Q. Son graduated May 2025. Started working July 2025 and had W-2 income for the rest of year. He lived in a different city. I am assuming that we can no longer claim him as dependent?
A. He maybe still can if he moved out after July 2 (he lived with you more than half the year).
Can the student be claimed as a dependent in the 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.
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.
The rule is that a child of a taxpayer can still be a “Qualifying Child” dependent, regardless of his income, if:
- 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)
- he did not provide more than 1/2 his own support (scholarships are ignored and not support provided by the student).
- 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 2024.
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 (page 15)
AOC has been claimed the last 3 years.
Q. I am looking at the university statements that I used to calculate the amounts in 2024, and I actually did add in the amount that is now indicated in box 6 for 2025. I will call the university to verify if that is the actual grant that was bumped to 2025. Does this information help?
A. Yes, that pretty much says you can ignore the 2025 box 6 amount (and is usually the case).
But, did you review the "loop hole" info? In you are interested in pursuing that, we would need some numbers. You would need to know if the scholarship is restricted to being used for tuition.
