Filing Status & Education Credits

[chakli]

We file our tax return as “Married filing Joint” with Two Dependent Kids (Son in College and Daughter in High School going to college this Fall 2022).

For 2022, We will have both Son and Daughter in college. My son is working part time this year and expected to make around 18000 or max 25000 if he decides to continue this fall. My Daughter also works part-time and expected to make around 4000 max this year. Both of them will not have any capital gains.

How do I plan to file 2022 tax return next year to minimize tax liability?

• Married Filing Joint with Two Dependents (get $5000 Education Credit) and File Separate return for Son for his income (saying he is claimed as dependent on parents return)

OR

• Married Filing Joint with Daughter only as Dependents ($2500 Education Credit) and Son Files separately on his own.

Are there any other options? Which one  would be better for us planning for 2022.

[Rangers44]

Hi Chalki,

As long as your Modified Adjusted Gross Income is under $160000, while filing as Married Filing Joint, or $80000 for Married Filing Separate, you can claim a full education credit for both and partial to the extent of phase-out at $180000 or $90000.

It will not help you file as Married Filing Separate.

https://www.irs.gov/credits-deductions/individuals/aotc#:~:text=To%20claim%20the%20full%20credit,%24...).

[Critter-3]

There is no "preferred" way to file only the correct way.  BOTH kids will be qualifying dependents of yours if they are full time students under the age of 24  no matter how much they make as long as they are not self supporting using wages.  

WHO CAN I CLAIM AS A DEPENDENT?

• Qualifying Child Dependent:

  • The child must be related to you. The child can be your son, daughter, stepchild, eligible foster child, brother, sister, half-brother, half-sister, stepbrother, stepsister, adopted child or an offspring of any of them.
  • Your child must be under age 19 or, if a full-time student, under age 24. There is no age limit if your child is permanently and totally disabled.
  • Your child must live with you for more than half the year, but several exceptions apply (ie. away at school).
  • The child cannot provide more than half of his/her support.
  • You must be the only person claiming the child
  • The child must be a US citizen, resident alien, national, or resident of Mexico or Canada.
  • The child cannot file a joint return with his or her spouse.

[Critter-3]

And both kids file their own returns but must indicate they will be claimed as a dependent on another return ... do not let them file before you in case they mess up.