Q. The interesting thing about all of this information is that it doesn't say your child can make too much money for you to claim him as a dependent. If that happens, the parent cannot report the room and board expenses from the 1099q. The student has to.
A. No, that's not the case. For claiming a tuition credit, it does matter if the student is your dependent or not. But that does not matter for the 1099-Q. Whoever is the recipient of the 1099-Q claims the room and board expenses, regardless of the student's dependent status. You file the 1099-Q, because you are the owner of the plan and you received the 1099-Q.
Q. Your child can make too much money for you to claim him as a dependent.
A. Yes but not exactly.
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.
A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:
- He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled
- He did not provide more than 1/2 his own support. Scholarships are excluded from the support calculation
- He lived with the parent (including temporary absences such as away at school) for more than half the year
So, it doesn't matter how much he earned. What matters is how much he spent on support. Money he put into savings does not count as support he spent on himself.
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.
The IRS 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
Q. Will try to change my younger child's 529 so the 1099q has her name.
A. They won't do that. Once the money is sent, the "recipient" is established. But it doesn't matter.
Q. Seems there was a problem with doing it that way. Don't think I can have the money sent to school if they live off campus.
A. No. That's not so. You (the owner) decides who you want money sent to, you, the school, or the student.
