Dependents & College

Forum|Forum|5 years ago
February 25, 2021
2 replies
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Are they my dependents? I have two children that are 20 and attending college. Their father moved to another state in 2017, and they have lived with me full time. Since fall 2019, their father has paid 2/3 of their college room & board and college tuition. I pay the other 1/3 of their college room & board and college tuition, their permanent address is with me, and they live with me on college breaks, summer, etc (their college is 45 minutes away). Their father doesn't think I can claim them, but I meet the IRS Qualifying Child Requirements (Relationship, Age, Support, Residency and Qualifying Child) and believe I have the right to claim them as my dependents. They do not provide more than half of their support and they have part time jobs in the summer only.

Can they file their own tax returns to get the Recovery Rebate Credit? It is my understanding that they do not qualify for the Recovery Rebate Credit since I CAN claim them as my dependents, even if I don't.

Can they file their own tax returns (stating that someone else CAN claim them but won't) to get the American Opportunity Credit? They both had minimal part time jobs in 2020, with little or no federal income taxes taken out.

Not A Product Question

CatinaT1

Level 15

You can and should claim them as dependents and claim the American Opportunity Credit.

They meet all the rules like you said; the rules for a parent to claim a college student are this:

The student is under the age of 24 on Dec 31 of the tax year and;
Is enrolled in an undergraduate program at an accredited institution and;
Is a full time student for some part of 5 months during the year, and;
the STUDENT did NOT provide more that 50% of the STUDENT’S support

They will not qualify for the Recovery Rebate Credit and they would not qualify for the American Opportunity Credit if they filed by themselves since they are your dependents.

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RK06Author

Level 2

To clarify: their father paying 2/3 of their college tuition and room & board does not factor into their "dependent" status for me?

Our income is too high to receive any of the education credits. When creating a tax return for them within turbo tax, my dependents can select "someone else can claim me on their tax return" and "not one will claim me in 2020", and it gives them the American Opportunity Credit. If I didn't claim them, are they allowed to do this?

Opus 17

Level 15

@RK06 wrote:

To clarify: their father paying 2/3 of their college tuition and room & board does not factor into their "dependent" status for me?

Our income is too high to receive any of the education credits. When creating a tax return for them within turbo tax, my dependents can select "someone else can claim me on their tax return" and "not one will claim me in 2020", and it gives them the American Opportunity Credit. If I didn't claim them, are they allowed to do this?

First, read my longer answer on the emancipation rule.

If we ignore the emancipation rule and assume that normal rules apply then,

your children can answer "yes" I can be claimed as a dependent and "no" the person who could claim me will not actually claim me.
this will disqualify them from a recovery rebate but allow them to claim AOTC. (The situation where the parent's income is too high to claim the AOTC is the one time that second question--"will the person who could claim you actually claim you" makes a difference.
as long as the children live in your home and don't provide more than half the own support, the amount of support provided by the other parent is irrelevant.

If we follow the emancipation rule, then

your children answer "no" I can't be claimed as a dependent by another taxpayer. The second question won't even come up.
As long as each child has taxable income more than $4300, support provided by either parent is irrelevant.

Opus 17

Level 15

This is actually somewhat complicated and I confess to being unclear on the point.

IRS publication 501 says this in the section on special rules for children of divorced or separated parents.

Emancipated child. If a child is emancipated under state law, the child is treated as not living with either parent.

The age of emancipation is 18 in most states. The only state where a 20-year old is not emancipated is Mississippi (age 21).

This is example 5 on page 13, https://www.irs.gov/pub/irs-pdf/p501.pdf

Example 5—child emancipated in May.

When your son turned age 18 in May 2020, he became emancipated under the law of the state where he lives. As a result, he isn't considered in the custody of his parents for more than half of the year. The special rule for children of divorced or separated parents doesn't apply.

The same information is contained on page 10 of publication 504 which covers divorced and separated individuals.

https://www.irs.gov/pub/irs-dft/p504--dft.pdf

Now, my confusion comes from the question, If the special rules for divorced parents don't apply when the child turns 18, doesn't this mean that the normal rules apply instead? Everything in my logical mind says the normal rules still apply (which is also what @CatinaT1 indicated). However, publication 501 and example 5 are pretty clear that the normal rules don't apply for emancipated children of divorced or separated parents. And there is also nothing that says that the emancipation rule only applies in the year in which the emancipation occurs, and the normal rules apply in the following year.

Taking that statement at its word, neither parent can claim the child as a "qualifying child" dependent because the child does not live with either parent. However, they could be a "qualifying relative" dependent of either parent who provides more than 50% of their total support, because residency is not required for a qualifying relative dependent who is a biological child. (Total support includes tuition and college expenses but also room and board where they live. Just because the father pays 2/3 tuition doesn't necessarily mean he pays more than half their total support.). If they have their own taxable income more than $4300, they are disqualified from being a qualifying relative dependent no matter how much support they receive from either parent.

Assuming they have taxable income more than $4300, no one can claim them as a dependent and they answer "no" to the question, "Can another taxpayer claim you as a dependent?"

The effect of this is is that have to claim the AOTC, not you, and unless they have substantial income from working, they probably won't actually get any money from the AOTC. However, for 2020, it also means they will qualify for a recovery rebate on their tax returns. And it may give them better financial aid packages in the future.

@Hal_Al what do you think?

Opus 17

Level 15

I also need to update my answer above on the emancipation rule.

Emancipated child. If a child is emancipated under state law, the child is treated as not living with either parent

If the child is treated as not living with either parent, they can't be a "qualifying child" dependent of either parent. However, they could be a "qualifying relative" dependent of either parent who provides more than 50% of their total support, because residency is not required for a qualifying relative dependent who is a biological child. (Total support includes tuition and college expenses but also room and board where they live. Just because the father pays 2/3 tuition doesn't necessarily mean he pays more than half their total support.) They are, however, disqualified from being a qualifying relative dependent of anyone if they have taxable income more than $4300.

I will make a revision above as well.