Am I eligible to be claimed independent/receive stimulus payments and AOTC?

[MangoTree1]

Currently my understanding is that under the listed circumstances I can be declared independent if my parents choose not to claim me, but I will still need to say that I can be claimed dependent by someone else. I will be providing 100% of my support in 2021 so it would be beneficial to me to receive the recovery rebate credit or more importantly be eligible for future stimulus payments. Turbo Tax also shows that if I am claimed independent that I will receive the American Opportunity Tax Credit but I don't know if this is correct because my tuition is paid by the 529 account not by me. 

• I was claimed dependent in 2018 and 2019
• Full time college student under 24 in 2020
• My parents make too much to take advantage of any education tax credits and receive very little for claiming me dependent. They still claim my younger sibling dependent.
• I receive the majority of my support through a 529 account that my dad owns but I am the beneficiary. Little to no support came directly from my parents.
• I provided less than 50% of my own support through a part time job.
• The 529 distributions go to my bank account and then I pay the school/other expenses.
• I have not lived at home in several years (I have my own apartment lease my parents are not cosigners)

[KathrynG3]

It depends. Yes, taxpayers that are not dependent file as single and potentially receive the stimulus payments and the American Opportunity Tax Credit.

However, if you do not provide more than 50% of your support, then the test would not be met. The 529 plan fund distributed to you as the beneficiary are still coming from your parent's 529 plan. See: What does "financially support another person" mean?

To determine whether you are not a dependent, use Worksheet 2 onpage 15 of 2020 Publication 501: Dependents, Standard Deduction, and Filing Information.

For more details, see: Many college students may still qualify for an Economic Impact Payment; review the guidelines and re... This registration was referencing the possibility of getting the stimulus payments when issued. The Recovery Rebate Credit would still be available even without registration.

If you do qualify to file as single, not checking the box that you could be claimed as a dependent, enter your details for the stimulus payments following these steps:

1. Go to the search box and enter stimulus. Click the Jump to link.
2. Answer Yes.
3. At the next screen, Let's double-check the amount you received, answer No to edit the first-round and second-round amounts.
4. Since no stimulus amount was received, enter 0. An amount must be entered in each box. When finished, click Continue.

For details about the American Opportunity Credit, see: Who is eligible to take the American Opportunity Tax Credit?

[Hal_Al]

Q. Am I eligible to  claim independent/receive stimulus payments?

A. No.  Since you CAN be claimed as a dependent, you may not receive the stimulus/rebate credit, even if your parent's don't actually claim you.  

You can be a dependent because your parent's provide more than half your support. Since they are the owner of the 529 plan, that support is considered as coming from them*.

Q. Am I eligible to  claim independent and receive AOTC?

A. No, for basically the same reason but also a 2nd reason . Full time, unmarried,  students, under 24 must support themselves with earned income, to be eligible for the refundable portion of the credit (the $1000).

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, a relationship test and residence test. 

The support test is different for each type. The support test, for a QC, is only that the child didn't provide more than half his own support. The support test for a Qualifying Relative (QR) is that the taxpayer provided more than half the relative's support.

You can no longer be a QC because you do not live with your parents**.  So, now there is a $4300 income test for  you to be a Qualifying relative dependent. If you made more than that at your part time job, you cannot be a QR dependent. Any other income?  

*The treatment of expenses paid with distributions from Sec. 529 plans and Coverdell ESAs in the support test is uncertain because of the dual nature of these college savings vehicles and a lack of IRS guidance. The consensus among tax experts is that it is parental support, because the parent is the owner of the plan.  It would be helpful, to your case, to make distributions to the beneficiary, not the owner.

More info: https://ttlc.intuit.com/questions/3402602-can-i-claim-money-from-a-529-fund-as-my-supporting-my-22-y...

**If your apartment is in the college town and your main purpose of being there is to attend college, your being there could be considered only a temporary absence from your parent's home.  In that case, you are still considered residing with them for purposes of the QC residence test.

[MangoTree1]

Thank you for your response!

My apartment is in a college town but I moved to the new city/state a year before I enrolled in college there. I also made about 11k at my part-time job so it is my understanding that as long as it can be determined that I am not living in my apartment because I am attending college I would not qualify to be claimed dependent?

[Hal_Al]

Yes.  From what you describe, you're on solid ground, for taking that position (you are NOT temporarily absent from your parent's home, so you do not meet the "live with them" test)