College Student & Credits

[Maisy]

Hello,

My oldest daughter, who is 21 year-old and full-time college student.  She had earned income of $11k in 2021.  She had no interest or investment income. She prepares her tax return with TurboTax and it shows she has earned income credit and recovery credit if she is filing independently.  If we don't claim her as dependent on the 2021 tax return, would the credits showed on her return by the system correct? 

Our income for 2020 made us only eligible for ~$1k recovery credit for our 3 kids :(

Please advise.  Thank you for your help.

[JamesG1]

Perhaps so.  Review the qualifications for both credits.

This IRS FAQ reports the qualifications for claiming the Earned Income Tax Credit without a qualifying child. 

Claim the EITC Without a Qualifying Child

You are eligible to claim the EITC without a qualifying child if you meet all the following rules. You (and your spouse if you file a joint tax return) must:

• Meet the EITC basic qualifying rules
• Have your main home in the United States for more than half the tax year
  • The United States includes the 50 states, the District of Columbia and U.S. military bases. It does not include U.S. possessions such as Guam, the Virgin Islands or Puerto Rico

Not be claimed as a qualifying child on anyone else's tax return

• Be at least age 18 at the end of the tax year (usually Dec. 31)
  • The minimum age to claim the EIC is generally age 19; however, if you are a qualified former foster youth or a qualified homeless youth, you need to be at least age 18.
  • If you are a specified student (other than a qualified former foster youth or a qualified homeless youth), you need to be at least age 24.

This IRS FAQ reports the qualifications for the third stimulus payment and the Recovery Rebate Credit.

The qualifications for the third stimulus payment are:

• you were a U.S. citizen or U.S. resident alien in 2021, 
• you were not a dependent of another taxpayer’s 2020 tax return, and 
• you have a Social Security number.

 There are income limitations are if your adjusted gross income (AGI) is more than:

• $150,000 if married and filing a joint return or filing as a qualifying widow or widower
• $112,500 if filing as head of household or
• $75,000 if filing as a single or as married filing separately. 

If you did not receive the third stimulus payment, you may receive that amount through a Recovery Rebate Credit found on line 30 of the 2021 Federal 1040 tax return.

[Maisy]

Thank you very much for your quick response.

Could you help me to understand this requirement "If you are a specified student (other than a qualified former foster youth or a qualified homeless youth), you need to be at least age 24". 

If she is a full time student and age 21, would that make her not meet this requirement?  She answers all of the questions for education tax credit so would the system use that info to determine if she meets the qualification for this requirement?

[JillS56]

 Yes, if she is a specified student and she needs to be over 24 years of age to qualify for the EIC credit.  

Yes, if she is a full-time student and age 21, she would not meet this requirement.

Yes, if she answers all of the questions for education tax credit the system would use that info to determine if she meets the qualification for this requirement.

Also, she has to answer the question that she is eligible to be claimed by another person.   Since she is under the age of 24 and a full-time student she is eligible to be claimed, even if you are not claiming her.   The keyword is "Eligible".

[Maisy]

Thank you both very much.