Qualifying dependent question

[wake88]

My son is 21 and a full time student. I don't plan to claim him as a dependent but when he fills our his taxes it says he needs not to pay the "kiddie tax" if he is over 17 and earning more than half of his support. What qualifies as "support"? His tuition is paid through a 529. He has a summer internship where he makes money. We pay his room and board which I plan to claim as a gift: $9850 each from myself and my wife to him for a total of $19,700. He made less than that as an intern. Does the gift count as support when I don't claim him as dependent. From what I can read "support" is when someone is your dependent. If I gift them money it shouldn't be considered support. He did very well with investments in 2024 so exceeded the $2600 limit. Thank you in advance.

[DianeW777]

It depends. Here is the rules for a child under 24 and a full time student. A gift, if not placed in a savings account would be considered as support provide by your child (not you) since the funds were given to your son.  If your son provides more than half of his own support, then you cannot claim your son. Any money your son does place in a savings account and does not remove by December 31st can be ignored for support purposes.

• Who can I claim as a dependent?

For tax purposes, the child's "age" is the age on December 31. The child is required to file the form if any of these conditions apply:

• the child is under 18 at the end of the year
• the child is 18 years old and does not have earned income that is more than half of the child's support for the year, or
• the child is a full-time student aged 19-23 and does not have earned income that is more than half of the child's support
  • What is IRS Form 8615: Tax for Certain Children Who Have Unearned Income 
  • Worksheet for Determining Support

[wake88]

Thanks for the quick response. I'm not following the first part. 

We electronically transferred the money into his savings account. That is the only money we gave him that he didn't earn on his own. Does the "kiddie tax" apply to him then? I don't plan to claim him as a dependent. Thanks

[AmyC · Accepted solution]

Instructions for Form 8615 state:

Form 8615 must be filed for any child who meets all of the following conditions.

The child had more than $2,600 of unearned income.

The child is required to file a tax return.

The child either:

Was under age 18 at the end of 2024,

Was age 18 at the end of 2024 and didn’t have earned income that was more than half of the child's support, or

Was a full-time student at least age 19 and under age 24 at the end of 2024 and didn’t have earned income that was more than half of the child's support.

(Earned income is defined later. Support is defined below.)

At least one of the child's parents was alive at the end of 2024.

The child doesn’t file a joint return for 2024.

Saving for College states: Cash support includes money and gifts to the student, as well as money paid to someone else on the student’s behalf. Cash support also includes payment of bills for housing, food, clothing, car payments, medical and dental care, and college costs that the student is responsible for paying. 

As @DianeW777 stated, the money in a savings account does not count for support.

See: 

•  Topic No. 553 Tax on a Child's Investment and Other Unearned Income (Kiddie Tax) 
•  What is the Kiddie Tax?