Full time students and personal exemption

[jimval2002]

My son was a full time student through May of 2016, when he graduated.  He then moved out of the house in July 2016, starting his new job on the 7th of July.  We paid for over half his expenses while he was a student, but he has paid 100% of his expenses since July 7th (yes, a miracle!) - does the requirement that we pay more than half his expenses only apply during the time he was a full time student or is it for the full year?

[SweetieJean]

How old is he?

[jimval2002]

20

[SweetieJean · Accepted solution]

The applicable rule ("Qualifying Child") is that he must not have have paid for more than half of his own expenses for the entire year.

So you need to do the math.

[Hal_Al]

Graduation year

If he/she was a student (under 24) for at least 5 months and lived with you for more than half the year, and did not provide more than 1/2 his own support for the whole year, you can still claim him. Be sure he knows you're claiming him, so he doesn't claim himself. He can only be claimed once. But, he can "file taxes" without claiming his own exemption.

The real question is who should be claiming him in this "transition" year to adulthood. You two have to agree on who is going to claim his exemption. Each should do their taxes both ways and see which way the family comes out best.  Even then, you have to meet the rules. The rule is that a child of a taxpayer can still be a “Qualifying Child” dependent, regardless of  his income, if:

1. he is a full time student under 24 for at least 5 calendar months of the year (graduating in May usually means you meet the 5 month rule)

2. he did not provide more than 1/2 his own support  (scholarships are considered 3rd party support and not support provided by the student). 

3. lived with the parent (including time away at school) for more than half the year

So, it usually hinges on  "Did he provide more than 1/2 his own support in 2016.

The support value of the home you provided is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants. IRS Publication 501 on page 20 has a worksheet that can be used to help with the support calculation. See: http://www.irs.gov/pub/irs-pdf/p501.pdf