19-year student with scholarship - dependent or independent

[biovision]

Hi

My 19-year old kid is full time student, received $25457 as scholarship and fully supports her. No other income. I understand scholarship is "unearned" income and read somewhere that to be independent, for tax purposes, should more than 50% of expenses from "earned" income. I would appreciate if you would clarify this situation.

1. Shall I claim her as my dependent as she has only has "unearned" income?

2. Should I not claim her as dependent as she pays 100% of her expenses?

Thanks

[DavidD66 · Accepted solution]

No, you should not claim her as a dependent.  According to the tax code:  Whether or not a scholarship is recognized as taxable income, it and educational expenses figure in the support tests for dependents. A qualifying child must not have provided more than half of his or her own support during the tax year.  Based on the information you provided you cannot claim your daughter as a dependent.  

If your daughter's scholarship would otherwise be 100% tax free, she may want to treat part of it as taxable in order to qualify for an education that otherwise would not be available.  For more information see the section on How to maximize your scholarships and tax credits in the following TurboTax Help Article:  

Taxes for Grads: Do Scholarships Count as Taxable Income?