Here's some clarification on a few things.
- Time spent away from home for the primary purpose of attending school is considered as having lived at home with the parents. So you *will* indicate the student lived with you "the whole year".
-The undergraduate student's earnings *do* *not* *matter*. The student could earn a million dollars and still qualify as your dependent.
- There is no requirement for the parents to provide the student any support. Not one single penny. The support requirement is on the student, and *ONLY* the student. That requirement reads:
If the student did not provide more than 50% of the student's own support, then the parent's qualify to claim the student as a dependent on the parent's tax return"
Take note that scholarships, grants, 529 distrubitons, gifts from Aunt Mary, money from mom and dad, money the student found on the street, etc. is all considered third party support and *do* *not* *count* for the student providing their own support.
THere are only two possible ways the student can provide more than half of their own support.
1) The student is self-employed or has a W-2 job and was paid sufficient funds to support their claim to providing more than half of their own support.
2) The student is the *PRIMARY* borrower on a *qualified* student loan and sufficient funds were distributed to the student during the tax year to support their claim to providing more than half of their own support.
Now even with the above two, as an example the student could have earned a million dollars and still not justify providing more than half of their own support. For example, if their qualified education expenses for the year was say, $20,000 for example, yet they received $80,000 in scholarships, grants and 529 distributions, the $20K is applied to the qualified education expenses with the remaining $80K applied to support "before" the student's million dollar income is even considered for their own support. In this scenario, in order for the student to have provided more than half of their own support, they would have had to have paid "at least" $80K of their own money for support. There is no way on this green earth that you will ever convince the IRS that an "undergraduate" had to pay more than $160K to support themselves for the year, I don't care where on the planet you attended college.
Next, if the parent qualifies to claim the student as a dependent (and I'm sure you do qualify) then it does not matter if you actually claim the student or not. the student has no choice and must select the option for "I can be claimed on someone else's return". So the parent has a choice here. But the student flat out does not.
