Q. What about the question regarding her self-support status on her return?
A. There is no such question on the actual tax forms. Form 1040 only asks if somebody can claim her as a dependent. But that question does occur in the TurboTax (TT) interview. The answer is no, she does not provide more than half her own support.
Q. So then she should indicate on her return that she can be claimed as a dependent but her parents should not actually do so on their return, correct ?
A. Correct. This allows her to claim the AOTC. But you lose the $500 dependent credit.*
Q. Can she claim the AOTC?
A. Yes, but not the refundable portion. The AOTC should fully wipe out her tax liability. TT should handle this automatically when she answers that nobody WILL be claiming her as a dependent (even though somebody [you] CAN claim her).
Q. The parents house is paid off, there’s no mortgage. Does that mean there's little or no home/house support?
A. No. In that case, the value of the home/house support, in the support calculation, is the fair market rental value of the home plus utilities & other expenses (e.g. real estate tax & insurance) divided by the number of occupants.
Q. She spent at most 2-3 weeks at home during 2024?
A. It's still her primary residence, for income tax purposes, and it's full year value is used in the support calculation. Although this is a "bad" rule in your situation, it's a good rule for most parents of college age students.
*With the tax law change, effective 2018, most students will get the same refund whether they claim themselves or not. The personal exemption has been eliminated and the standard deduction (with earned income) increased. However, they only qualify for an education credit, if they are not actually claimed as a dependent.
