Can I still claim 19 yr old fulltime student with scholarships and grants

[bluemoon]

Dear TT Community,

Here's' the scenario:

I am the non-custodial parent, and I will need the FORM 8332 for current filing (Tax Year 2023 to be filed by April 2024). Up until now I have been able to claim my child as my dependent as their income was less than $4200 (I believe for the 2023 tax year it is now bumped to $4700). For the current (Tax Year 2023), my income is primarily from Unemployment, Dividends and Stock sales, and totals less than $12,000, and my child's scholarship/grants and internship totals around $13,000 ($10,000 from grants and scholarships and $3,000 approx., from work on w-2).

Given the above scenario, am I am to claim my 19 year old child as my dependent on taxes? I am leaning towards "NO." As, their income (from employment and scholarships/grants) is over $4,700, as such no longer qualifies as dependent (unless there are some EXCEPTIONS I am overlooking) and my 19 year old child will have to file their own taxes as a single as an independent. 

Fielding the above scenario to get a second or third opinion. 

Thank you in advance for your assistance.

[Vanessa A]

The fact that they are still a Full-Time student means that they can earn over $4,700 and you can still claim them as a dependent.  However, if they pay for more than half of their own support, then you would not be able to claim them.

As the non-custodial parent of a 19 year old, you may not gain any tax benefits from claiming your son as you are not eligible for the EIC and since they are 19, they would only be eligible for the $500 Non-Refundable Other Dependent Credit.  Since your income is already below the filing threshold, you would not have any tax liability and would not be eligible for the Other Dependent Credit for that reason.

You may however, be able to claim the refundable portion of the American Opportunity Credit which is $1,000.  You would NOT be able to claim the full credit as part of it is considered non-refundable.  See the answer by Champ Hal Al for a detailed explanation on how to maximize your credit and minimize their scholarship income

 qualifying child

Tax Info for NonCustodial Parent

[bluemoon]

Thank you kindly for your detailed and informative response. My child does not pay for more than 1/2 of their expenses but the scholarship and grants do provide decent amount of cushion for tuition and housing (I could be wrong, but all of the housing is covered with the grant) and if my income is less than $80,000 then the child's tuition is also free which can be astronomical around $26,000 per semester). I have engaged a Student Financial Aid expert (using them for past 2 years to assist with FAFSA Student Aid) and they had suggested I should claim my child as my dependent as the ex-who is remarried her (or their joint income) is north of $150,000 and using their taxes for filing FAFSA would be determinantal to my child's FAFSA grants/scholarships and tuition reduction. 

Not sure if the additional information as stated above would result in any changes or updates to your response. Thank you again for your detailed response.

[Vanessa A · Accepted solution]

No.  It does  not change my answer.

"Scholarships.

A scholarship received by a child who is a student isn't taken into account in determining whether the child provided more than half of their own support." Pub 17

[bluemoon]

Thank you again. Very much appreciated.