I am a 24 y/o college student who is unmarried and has no income, I do receive about 20,000 in grants every year that I pay my tuition and living expenses with but none of it is taxable. This is the first year I will have no income as a full time college student and I’m wondering if I can still claim my son and receive his child tax credit or if I will receive $0 in tax credit because I have no income to claim. This is question I have searched for before but have found absolutely no answers for.
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The child tax credit rules for 2021 tax returns were unique to tax year 2021; you could receive the CTC even if you did not have any income earned from working.
That will not be the case for tax year 2022. For tax year 2022, the rules revert back to the requirement to have income earned from working in order to receive the refundable part of the CTC. If you do not have at least $2500 of income from working you will not get the CTC or the additional child tax credit. Sorry.
And...without income earned from working you are not eligible for any other child-related credits like earned income credit or the childcare credit.
Hi,
The Child Tax Credit in 2022 is not a refundable credit, so you can only use it to the extent you owed tax. The Additional Child Tax Credit is a refundable credit (one you can get even if you don't owe taxes) but the amount of the credit that is potentially refundable is calculated by taking 15% of your earned income above $2,500. You get to claim the lesser of this calculated amount or your unused Child Tax Credit amount, up to $1,400 per qualifying child. It sounds like this will not work for you for 2022.
Here is an article that will explain in more detail.
Cheer below if this answer is helpful.
Someone "claimed" this post without providing a reply.
The child tax credit rules for 2021 tax returns were unique to tax year 2021; you could receive the CTC even if you did not have any income earned from working.
That will not be the case for tax year 2022. For tax year 2022, the rules revert back to the requirement to have income earned from working in order to receive the refundable part of the CTC. If you do not have at least $2500 of income from working you will not get the CTC or the additional child tax credit. Sorry.
And...without income earned from working you are not eligible for any other child-related credits like earned income credit or the childcare credit.
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The child should meet the qualifications to be your dependent in 2022 for you to be able to claim child tax credit. $1,400 per child is the maximum allowable refund for individuals with no tax liability.
Following are the qualification for you to be able to claim your child as a dependent being a single parent:
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.
The child must be (a) under age 19 at the end of the year and younger than you (or your spouse if filing jointly), (b) under age 24 at the end of the year, a student, and younger than you (or your spouse if filing jointly), or (c) any age if permanently and totally disabled.
The child must have lived with you for more than half of the year.2
The child must not have provided more than half of his or her own support for the year.
The child must not be filing a joint return for the year (unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid).
Another important consideration is if your are living with your parent/parents who provides more than half the support for your child then they may be eligible to claim the child as a dependent on their return. Here are some tie breaker rules in that determine who gets to claim the child:
If only one of the persons is the child's parent, the child is treated as the qualifying child of the parent.
If the parents file a joint return together and can claim the child as a qualifying child, the child is treated as the qualifying child of the parents.
If the parents don't file a joint return together but both parents claim the child as a qualifying child, the IRS will treat the child as the qualifying child of the parent with whom the child lived for the longer period of time during the year. If the child lived with each parent for the same amount of time, the IRS will treat the child as the qualifying child of the parent who had the higher adjusted gross income (AGI) for the year.
If no parent can claim the child as a qualifying child, the child is treated as the qualifying child of the person who had the highest AGI for the year.
If a parent can claim the child as a qualifying child but no parent does so claim the child, the child is treated as the qualifying child of the person who had the highest AGI for the year, but only if that person's AGI is higher than the highest AGI of any of the child's parents who can claim the child.
The IRS Pub 501 has many helpful examples which further explain if your can claim your child as a dependent on your tax return.
Publication 501 (2021), Dependents, Standard Deduction, and Filing Information
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@SenoraMarissa said " I do receive about 20,000 in grants every year that I pay my tuition and living expenses with but none of it is taxable."
Technically, that's probably not true. Scholarships that pay for qualified educational expenses (QEE - tuition, fees, books and other course materials) is tax free. Scholarship amounts that exceed QEE is taxable income, on the student’s tax return. That is, scholarships that pay for living expenses is taxable income. But, if that amount is less than $12,550, you still do not have enough income to have to file a tax return. Taxble scholarship is not classified as "earned income" for purposes of claiming the child tax credit or earned income credit. So, you still cannot claim those. Loans (as oppossed to scholarships/grants) are not reportable income, regardless of how spent.
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If you are a student, over age 23, and are not claimed as a dependent by someone else (e.g. your parent) you may be eligible for the up to $1000 refundable American Opportunity (tuition) Credit. That credit is not dependent on having either kids or earned income. You must be at least a half time undergraduate student. There's even a loop hole available to claim the credit, if you are on scholarship.
The “loop hole”. The student reports all his scholarship, up to the amount needed to claim the American Opportunity Credit (AOC), as income on his return. That way, the parents (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship. You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.
Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.
Books and computers are also qualifying expenses for the AOC. So, extending the example, the student had another $1000 in expenses for those course materials, paid out of pocket, she would only need to report $5000 of taxable scholarship income, instead of $6000.