Dependent/ Student/ Internship

[catkik]

My daughter is a full time student and participated in a 2 semester coop in 2025. She only took classes in the Summer. The school still considered her a full time student. She made $38000 and will need to file taxes. She lived at home and we technically provided her support. She only paid some of her minor expenses.  After looking over dependent requires, we believe she still is considered our dependent.

Is there a tax advantage to not claim her as a dependent? 

[CatinaT1]

Maybe, it depends on a couple things. Can you tell me how old your daughter was on Dec 31, 2025?  She only has to attend school for part of at least 5 months during the year so if she had classes from May 30-Sept 1, that counts as 5 months and makes her a full-time student.  Did she get a 1098-T from the school and does she have tuition paid in box 1 that is more than any scholarships or grants listed in box 5? And finally, is your income on your return over $180,000?

Once I have that information, I can advise you better.

[catkik]

She did get 1098-T. 

Box 1 is $7100 and box 5 is $5300, but $7100 includes room and board, so technically, she has some taxable scholarships - about $2300

no, our income is not over 180000

[catkik]

She is 21 by the way

[RobertB4444]

As long as she is under 24 then yes, you can claim her as your dependent.  You will be able to claim the tuition credit for her as well as a $500 deduction for her.

The advantage to not claiming her is all for her.  As long as you are claiming her she can't get as much financial aid with college and she's not entitled to grants she might otherwise be entitled to because your income is added to hers to determine what she qualifies for.  She is also paying taxes on $38,000 without being able to take a full deduction for herself.  

[catkik]

That's very interesting!

Can you explain more on  "She is also paying taxes on $38,000 without being able to take a full deduction for herself. "? Are you saying she won't be able to take a standard deduction? 

So I don't have to claim her as a dependent even if she qualifies to be our dependent?

Thank you!

[RobertB4444]

No, she'll still get the $15,750 standard deduction.  The limitation is dating myself - her personal exemption isn't allowed but that isn't allowed anymore anyway so just forget that I said it.

[catkik]

I just tried both scenarios in TurboTax. We don't qualify for AOP credit because her tuition was paid by a restricted use state scholarship, and the rest of the expenses are non-qualified education expenses as room and board. So if we claim her as a dependent, we will get the extra dependent credit. And it does not change her refund either way - whether she is claimed by someone or not. Does it appear to be correct? 

[AmyC]

Yes. If nobody can claim the AOTC credit since the expenses were covered with a restricted scholarship, you can at least get the $500 dependent credit by claiming your daughter. Her standard deduction is the same either way. 

Someone who can be claimed as a dependent receives a standard deduction that cannot exceed the greater of:

•  $1,350, or 
• earned income plus $450 (but not more than the regular standard deduction).

[catkik]

I am a little confused by your last statement -

Since her income (for paid internship she had in 2025) was $30,000, TT is showing that she will get standard dedcution of $15750, - whether we claim her as a dependent or not. Does that sound correct?

[RogerD1]

Yes, that is correct.  The last part of that statement about her standard deduction being her earned income plus $450 is used to determine the correct standard deduction amount for her.  Since her earned income plus $450 is greater than the standard deduction for the filing status, her standard deduction will $15,750 - regardless of whether or not she is claimed as a dependent by you.

Another factor for claiming her as a dependent is that you have provided over half her support.  And if you do claim her as a dependent, be absolutely certain that in the Personal Info section of TurboTax that your response to the questions "Do any of these apply to [name]?", the box for "Another taxpayer can claim [name] on their tax return".  If she doesn't check this box, she will be claiming herself, which will cause your return to reject if you also try to claim her as a dependent.