A person
can only be claimed on one tax return. As others have indicated, the real
question is should she have claimed herself. If not, she should file an amended
return, unclaiming herself. You
do not need to wait until his amended return is fully processed, to claim him
on your return. But, you cannot e-file. You will have to mail in a paper
return. Most unmarried college students, still living at
home, should not be claiming themselves.
Why did she
even file a tax return, if she is still financially dependent on you? One possible
reason is that 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 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. You must have actually paid tuition, not had it paid by
scholarships & grants. It is usually
best if the parent claims that credit.
Here’s yet another tax issue. You state that she received
a scholarship from college that went to tuition expenses. That normally
means neither you or she qualifies for the tuition credit. But, there is
a tax “loophole” available. The student reports all his scholarship, up to the
amount needed to claim the American opportunity credit, as income on his
return. That way, the parents can claim the tuition credit on their return.
They can do this because that much tuition was no longer paid by "tax
free" scholarship. You cannot do
this if the school’s billing statement specifically shows the scholarships
being applied to tuition or if the conditions of the grant are that it be used
to pay for qualified expenses.
Using an example: Student has $8,000 in box 5 of the 1098-T
and $8000 in box 2.
At first glance he/she has no taxable income and nobody can claim the American
opportunity credit. But if she reports $4000 as income on her return, the
parents can claim $4000 of qualified expenses on their return.
