Claiming California vs. Federal Dependent

[TaxSaver101]

On TurboTax 2024, if I want to claim my dependent on my California tax return but not my federal tax return, does my dependent have to check the box "Another tax payer can claim me on their tax return" and also check the box "Another taxpayer will not claim me in 2024"? I am also confused as to whether these checkbox statements pertain to federal tax return, state tax return, or either, as it's not specified. 

After that there is another question for my dependent on TurboTax - "Do either of these statements apply to the other tax payer? 1. The person is required to file a 2024 tax return. 2. The person is filing a 2024 tax return for reasons other than getting a refund of taxes paid or withheld." How does checking "Yes" or "No" to this question affect my dependent's credit and deductions?

[MaryK4]

If another taxpayer can claim you as a dependent on their return, you can't claim any dependents on your own tax return (even if that person doesn't actually claim you).

Recent changes to IRS instructions clarified who is a "taxpayer" for purposes of this rule. Another person who would otherwise be able to claim you isn't considered a "taxpayer" if either of the following statements are true about this person: 
- The other person isn't filing a tax return because they're not required to, OR
- If they are filing even though they're not required to, they're only doing so to get back money they already put toward paying taxes (like paycheck withholdings or estimated tax payments)

[TaxSaver101]

I'm actually more talking about how my dependent would fill out the tax returns. If I'm claiming my dependent on my California tax return but not my federal tax return, does my dependent check the box "Another tax payer can claim me on their tax return"?

If they answer "Yes" to above question, there are another two check boxes. 1. Another tax payer will claim me in 2024 2. Another tax payer will not claim me in 2024. How would my dependent answer this question?

[MaryK4]

Yes, if you CAN claim them but are not (on the federal return), they would indicate this.  So the next question would be Another person will not claim them and you have to answer Yes or No - you are filing a federal return AND you are fling for other reasons than getting a refund.  @TaxSaver101 

[Buttercup21]

I read somewhere TurboTax doesn’t allow us to not claim a dependent in federal but to claim them in state (CA).  Perhaps having to do with filing the state electronically.  Is that true?  Or is there no issue, legally nor with TurboTax?

[DawnC]

Generally, the dependents you can claim on your California return are the same as those you claim on your federal return. There is one exception:

Under federal law, you can't take a dependent exemption for someone who claims a deduction or credit for education expenses on their own federal return. So for federal tax purposes, many people must make a choice whether to claim a deduction for their student dependent or let the student claim a deduction or credit for education expenses on the student's own federal return.

California has different rules. You can add a California-only dependent exemption if:

 - You meet the qualifications to claim the person as your federal dependent, but

 - You choose not to claim the person as your federal dependent so that they can take a deduction or credit for education expenses on their own federal return.  @Buttercup21 

[Buttercup21]

Yes, this is exactly my situation, my son taking the ed credit, and I see now that I can refrain from claiming him on my federal and then add him in as a CA state adjustment.  My question now is if he answers No to the fed question about being claimed by someone else, does he need to and how does he adjust his CA state if I claim him on my CA state?

[DawnC]

On his federal return, he should answer yes, that someone can claim him, but no, that person will not claiming them.  Assuming you are claiming him on the federal return and you have a filing requirement, he should select YES to the 3rd question.  This allows him to take an education credit, but doesn't allow an exemption on the CA return.  So, he doesn't need to make any adjustments on his CA return.   He won't get his exemption on the state return since he will answer YES to the Can someone else claim you? question.   If he answers NO to the 3rd question, that would change his answer to NO, no one can claim me.   And if that is the case, you could not take the credit on your CA return.  

 @Buttercup21