Extensions and amendments

[Stevehofwa]

If I filed jointly and claimed. Child dependent with their income on my return , I believe I can later amend to delete the dependent and have her file a return(because she could show she was not a dependent and could thus get done tax credits greater than the child tax credit I would get).   The original return was filed with an extension, so it’s last amendment date to get a refund is 3 years from the actual filing date.  However, does that extension also apply to the child’s individual tax return(which wasn’t filed at all as the income was included in the parents return)-since effectively my return was her return.  

[KrisD15]

First of all, whether the child is a dependent or not, if the child has earned income, they need to file a tax return. You would not claim that income. 

If it was only unearned income, they would most likely need to be claimed as a dependent. 

No, your extension only applies to your amended return. It would not apply to anyone listed as a dependent on your return. 

[Stevehofwa]

I suppose if the child had  used savings for expenses they could still claim to be a non dependent even if they had no earned income.  Only worth a few hundred bucks here(value of aotc refund on her return vs decrease of fed and state taxes on mine).

[DMarkM1]

If she provided over 1/2 of her own total support using savings (for example) that means she was not your dependent child and also means you did not provide over 1/2 of her total support therefore disqualifying her as your qualifying relative dependent as well.   

Factors to consider for determining who provided over 1/2 of her total support are listed here in Publication 501.   

You should also consider Table 5 in Publication 501 for determining dependent status.  In calculating gross income for the qualifying relative test, only interest earned on the savings account during the tax year is income not the total amount in the savings account. 

[Stevehofwa]

This was for back in 2018 when she was 23(so Monday would be the last day to file her return for a refund, although for mine it was with an extension so I’d have more time).  As I said, only worth at most $250(750 increase in my taxes including state , 1000 aotc for her), maybe not worth the risk(I pay 750 and somehow her filing doesn’t work out), and maybe not justified in the more than 50% own support claim.  

[RobertB4444]

@Stevehofwa  I would be very hesitant to expect a $1000 refund on a 2018 return for an American Opportunity Tax Credit that shows zero income on the return.  I think that you would be better off starting on 2019.

[Stevehofwa]

She did have 4000 in unearned income, but maybe that doesn’t make her a non dependent.  She took the aotc in 2019(too old to be a dependent, and too much income to be a qualifying relative, plus the aotc is worth more than the child/dependent credit-1000 vs 500).  

[Stevehofwa]

Correction, 2000.  Do I have to claim her as a dependent?  Thats never been clear to me.  And if I decline to claim her on the federal return, can I still do so on a state return?

[Stevehofwa]

If that’s true, then she could file her return today, and I could correct mine using the extension.   And the CA return wouldn’t change at all.

[Stevehofwa]

I saw an answer on there boards that seemed to confirm this: https://ttlc.intuit.com/community/after-you-file/discussion/can-i-add-dependent-whom-i-cannot-add-in...

[Stevehofwa]

I guess the point is, I can decline to claim her as a dependent, and then she can file herself, claiming the education credit, while still claiming as a dependent for CA.

[Stevehofwa]

The next questions would be:

1. If her return was rejected(saying she was already a dependent) before mine was processed, what happens?

2. Does she get interest on her refund? I assume I would pay interest on my underpayment.

[Stevehofwa]

So she would not get interest on the refund, but I would pay interest on the underpayment, which reduces the value somewhat.