filing status for self-supporting college student under 24

[tam9]

My child is 21, full-time college student, with part-time income (a few thousand dollars in 2020), self-support (not much income, but using her saving).

As a parent, we don't provide her support (probably only 10%). In this case, can she file her tax as an independent?

For the 2020, if she claims as an independent, I believe she can earn the recovery rebate credit, and would it be more beneficial than us filing her as a dependent?

[DJS]

If your daughter can be claimed as a dependent then on her tax return she must say that she can be claimed as a dependent by someone else. However, if she really does provide 90 percent of her own support then she can claim herself. The rule is that she must not have provided more than half of her own support for you to calim her as a dependent. 

• Support: She must not have provided more than half of her own support during the year for you to claim her as a dependent. 

However, does she live at home and pay rent? Do you pay for her car insurance? etc. Make sure that she really is providing more than half of her own support.

[Hal_Al]

Be careful with this.

There's $1800 stimulus (recovery rebate credit) money on the table for her.  You will  lose the $500 Other dependent credit (she's too old for the Child Tax credit) plus (possibly) the $2500 Tuition Credit.  

She is not (most likely) eligible for the $2500.  It sounds like she does not have enough income (and tax liability) for the $1500 non-refundable portion.  Even though she supports herself, she does not do so with earned income, so she is not eligible for the $1000 refundable portion.

As to self support, savings (in her name, including UTMA)) are self support. 529 plans are not.  Scholarships are not. Student loans are unless the parent co-signed.  

The support value of the home, provided by the parent, is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants.  Even if she is away, at school, she is considered to still be living at home.  School is only a temporary absence. 

The IRS has a worksheet that can be used to help with the support calculation. See: http://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf

[tam9]

Thank you for your useful info. She lives away with her friends (pays rent and utilities by herself) and pays her car insurance. She doesn't have much income for 2020 but she has some savings from her high school part-time job saved up. As a parent, I know we can claim her as a dependent, but I wonder if we should do that for her benefit which she could claims for the stimulus money (maybe?)

[tam9]

Thank you for your resource, Hal_Al

She is basically living off her saving (some savings are from high school part time job saved up, and some are financial aid).

The thing is, her address remains at our place although she lives away. 

So if we claim her as a dependent, we will loose $500 on our return, but she can claim $1800, then it's probably more beneficial if we don't claim her as a dependent....

[Hal_Al]

"I know we CAN claim her as a dependent".

Q. But I wonder if we should do that for her benefit which she could claims for the stimulus money (maybe)?

A. No. It's not optional.  If you CAN claim her,  she can NOT claim herself (and the stimulus money), even if you choose not to claim her.  

You don't mention the possible $2500 education credit.  Why not?  There is a loop hole available to claim it even if she is on scholarship.

[tam9]

Thanks again. I wasn't sure if $2500 education credit would be applicable, but I'm sure it is.

Since her address remains with us, we can claims as a dependent, then that what we should. 

Your information was very helpful. Thank you.