College graduate - dependent?

[fusilli45]

Hello, my daughter was a full-time student who graduated from college in May of this year at age 22 (will be 23 by year-end). I paid her last semester tuition in January. She has started working (probably making about 30K this year) but continues to live with me, and I will have provided more than half her support for the year. Can I claim her as a dependent when filing taxes for 2022, or obtain any tax credit for having paid tuition this year while she was a full-time student? 

[DoninGA]

You should be able to claim her as your dependent under the Qualifying Child rules since she was a full time student and under the age of 24 in 2022 if she meets all the requirements under the rules.  However, you need to verify that she is not providing over one-half of her own support.  Use the IRS support worksheet here - https://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf

To be a Qualifying Child -

1. The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.
2. The child must be (a) under age 19 at the end of the year, (b) under age 24 at the end of the year and a full-time student or (c) any age and permanently and totally disabled.
3. The child must have lived with you for more than half of the year. Temporary absences while away at college are considered living with you.
4. The child must not have provided more than half of his or her own support for the year.
5. If the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child.
6. The child must be a U.S. citizen or U.S., Canada or Mexico resident for some portion of the year.
7. The child must be younger than you unless disabled.

[fusilli45]

Thank you for the quick reply! 🙂 Just to clarify further for me - while she is under 24 at the end of this year, she will not be a full-time student by year-end (she was only a full-time student for the first half of this year). Does this exclude her under point #2 in your reply? 

[NCperson]

@fusilli45 

she was a full time student which is defined as ANY 5 months of 2022.  it's not a "point in time" (dec 31) determination

also, as she is your dependent, her college expenses (that 1098-T) can create a tax benefit in 2022 for you.  

this is the official IRS tool to determine who is a dependent: it'll take less than 5 minutes to complete.  While the real issue is whether she paid more than 50% of her living expenses, that is unlikely since she presumably paid none the 1st 5 months of the year so it'll be hard for the math to exceed 50%

https://www.irs.gov/help/ita/whom-may-i-claim-as-a-dependent

in 2023, even if she is still living with you (and no longer a student), once she makes $4300, she is NOT your dependent

[DoninGA]

As long as she was a full time student for any 5 months or part of a month during the year she would meet the requirements.

[Hal_Al · Accepted solution]

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. 

There are two types of dependents, "Qualifying Children"(QC) and Other ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test. Only a QC qualifies a taxpayer for the Earned Income Credit

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 2021.

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  (page 15)

If he has already filed one way, he can file an amended return, going the other way.