Thanks for the reply, but the more times I re-read your answer, the more questions I have!
The Turbotax interview questions and FAQ are seriously lacking in this area.
Am I allowed to illustrate with actual numbers?
First I looked back at all the past years TT returns and worksheets.
All years my son was in college, we never got any credits for anything at all related to him being a dependent because we were phased out by income limits, no traces of all the 1098-T and 1099-Q I was asked to enter in interview questions, so the plan is not to put him as a dependent in 2024.
But I am still unclear for his own taxes, hoping he does not owe taxes for our bad planning/using his 529.
What is the IRS definition of 'if he supported himself by working'? Does it mean that calendar tax year? Does it have to be W-2 income during the school year? Or can it be from savings of his summer internship income of previous years and his capital gains only?
Tax year 2022 - we put as dependent, paid all tuition from 529, all the rest from our savings, he answered yes to can someone claim you as a dependent, but had a well paid summer internship with W-2 income and paid his taxes, saved/invested his earnings.
Tax year 2023, same as 2022, had another summer internship with W-2 income and paid his taxes. Saved/invested that.
No 1098-T or 1099-Q interview questions were asked during his tax filing (used TT). No AOTC questions asked either.
Tax year 2024.
Last Undergrad semester of his BS, Spring 2024. 1098-T Box 1 12724. No scholarships.
Room and board from Cost of attendance for that semester from university website 8989 (paid by him, but his weren't that high) .
Teaching assistant Spring 2024,W-2 1.5K,W-2 summer income approx 11.5k. Capital gains $7K. So approx 20k in 2024.
Grad school Fall 2024. 1098-T Box 1 4965.68. No scholarships. Room and board from COA website 11574 for one quarter, but again he skimped and did not spend that much, although he has that much saved.
Should he still answer Yes to 'Can someone claim you as a dependent?' even if he provided clearly over half his support. I think not.
Additional wrinkle - he had leftovers in 529, so we paid Spring 2025 grad tuition of 5k from 529 in December 2024, even though he has enough in his own savings and it showed up in his 1099-Q for 2024. Was this a big mistake? Are there penalties?
1099-Q for 2024 has 18087.25 in box 1. Earnings 3793.34, basis 14293.91. Distribution is from State checked.
More confused. Haven't even asked about kiddie tax. Just want to get this right for him.
