Graduation year
If he (the student) is (under 24) was a student for at least 5 months and lived with the parent for more than half the year, and did not provide more than 1/2 his own support for the whole year, the parent can still claim him.
There are two types of dependents, "Qualifying Children"(QC) and standard ("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, relationship test and residence test. Only a QC qualifies a taxpayer for the Earned Income Credit and the Child Tax Credit. They are interrelated but the rules are different for each.
The $4200 income limit ($4300 in 2020), you may have heard about only applies to standard dependents (Qualifying relatives)
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 considered 3rd party support and not support provided by the student).
- lived with the parent (including time away at school) for more than half the year
So, for graduation year, it usually hinges on "Did he provide more than 1/2 his own support in 2020.
The support value of the home provided by the parent 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://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf
