College student

[MC4C]

My daughter has just graduated high school and is getting a federal student  loan and I am getting a parent plus student loan for her.  Will I be able to claim her on my taxes as a college student.  She also works between 18 to 26 hours per week at her job.  If I can claim her how will she need to file her own tax return.  

[RossP88]

Hi MC4C! She will only need to file if she earned over $12,550 in 2021 if employed or $400 if she was an independent contractor. She will file her own return but just mark that she is being claimed by another taxpayer as a dependent. While she may not need to file, she may be eligible to get a refund based on the witholding she paid during her employment. 

[JohnS_CPA]

It is likely you can take her a dependant but you may have to do some calculations. Here is the detail.

A dependant is defined as either a qualifying child or a qualifying relative. To be a qualifying child under  a student must meet four tests:

• Relationship: The child must be the taxpayer’s child or stepchild (whether by blood or adoption), foster child, sibling or stepsibling, or a descendant of any of them.

• Age: The child must be under age 19 or a full-time student under age 24 at the end of the year. To be considered a full-time student, the child must be enrolled for the number of hours or courses the school considers to be full time and must be a student for at least five months during the year.

• Residency: The child must live with the taxpayer for more than one-half of the year. The child is considered to live with the taxpayer while he or she is temporarily away from home due to education, illness, business, vacation, or military service.

• Support: The student cannot have provided more than one-half of his or her own support.

Also your daughter cannot be married and file a joint return  and must be a U.S. citizen or resident.

If your child gets a job and and uses these funds to provide at least half of her own financial support, you can’t claim the child as a tax dependant. However, support generally includes household expenses such as rent, groceries, utilities, clothing, unreimbursed medical expenses, travel costs and recreation expenses.

The situation becomes more complicated when taking out loans to cover the cost of education. The cost of education is considered part of your duaghter's support. When the student obtains a loan that he or she is obligated to repay, those amounts are considered support provided by the student.  If parents borrow money that they are obligated to repay, the funds are considered provided by the parents.

If you want to go through a detailed calculatione the IRS provides a worksheet: Worksheet for Determining Support 

As for her own tax return: If she is your dependant she will file her own tax return and select "someone can claim me as a dependant".  If you determine she does not qualify she would file using Single as her filing status.