I've recently graduated from college and have begun working full-time. However, I also recently moved in with my parents. I do not pay them rent. Am I allowed to claim myself as a dependent? Would it be advantageous to do so? What percent of my income can I expect to go to taxes either way?
Usually we hear that question from the parents: our child graduated and got a job, but still lives at home, can we still claim him as a dependent. As others have said: if they CAN claim you, you cannot claim your own exemption ("claim yourself').
There
are two types of dependents, "Qualifying Children"(QC) and standard ("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.
Here's the standard answer for when the parents ask that question:
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. The rule is that a child of a taxpayer can still be a “Qualifying Child” dependent, regardless of 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. did not provide more than 1/2 his own support
3. lived with the parent (or was away at school) for more than half the year
So, it usually hinges on "Did he provide more than 1/2 his own support for the tax year".
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
If he has already filed one
way, he can file an amended return, going the other way
Usually we hear that question from the parents: our child graduated and got a job, but still lives at home, can we still claim him as a dependent. As others have said: if they CAN claim you, you cannot claim your own exemption ("claim yourself').
There
are two types of dependents, "Qualifying Children"(QC) and standard ("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.
Here's the standard answer for when the parents ask that question:
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. The rule is that a child of a taxpayer can still be a “Qualifying Child” dependent, regardless of 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. did not provide more than 1/2 his own support
3. lived with the parent (or was away at school) for more than half the year
So, it usually hinges on "Did he provide more than 1/2 his own support for the tax year".
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
If he has already filed one
way, he can file an amended return, going the other way
Tax bracket info ("What percent of my income can I expect to go to taxes either way"): <a rel="nofollow" target="_blank" href="http://www.bankrate.com/finance/taxes/tax-brackets.aspx">http://www.bankrate.com/finance/taxes/tax-brackets.aspx</a>
Your taxable income is after deductions and exemptions. So, if you are a dependent, subtract $6300 from your income. If you are not a dependent, subtract $10,350.
You do not claim yourself as a dependent .... you claim your own personal exemption if you are no longer a dependent of your parents.
Here are the complete rules to claim a dependent that your parents will use ... if you qualify as their dependent you may not claim your personal exemption.
Rules for Claiming an Exemption for a Dependent:
- You cannot claim any dependents if you, or your spouse if filing jointly,
could be claimed as a dependent by another taxpayer.
- You cannot claim a married person who files a joint return as a dependent
unless that joint return is only a claim for refund and there would be no tax
liability for either spouse on separate returns.
- You cannot claim a person as a dependent unless that person is a U.S.
citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico.
- You cannot claim a person as a dependent unless that person is your
qualifying child or qualifying relative.
Test 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 and younger than
you (or your spouse, if filing jointly), (b) under age 24 at the end of the
year, a full-time student and younger than you (or your spouse, if filing
jointly), (c) any age if permanently and totally disabled.
3. The child must have lived with you for more than half of the year (except
for temporary absences such as for school)
4. The child must not have provided more than half of his or her support for
the year.
5. The child is not filing a joint return for the year (unless that
return is filed only as a claim for refund).
6. 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.
Test to be a Qualifying Relative:
1. The person cannot be your qualifying child or the qualifying child of any
other taxpayer.
2. The person either
(a) be related to your in
one of the following ways:
Your child, stepchild, foster child, or a descendant of any
of them
Your brother, sister, half brother, half sister,
stepbrother, or stepsister.
Your father, mother, grandparent, or other direct ancestor,
but not foster parent.
Your stepfather or stepmother.
A son or daughter of your brother or sister.
A brother or sister of your father or mother.
Your son-in-law, daughter-in-law, father-in-law,
mother-in-law, brother-in-law, or sister-in-law.
OR
(b) must live with you all year as a member of your household
(and your relationship must not violate local law).
3. The person's gross income for the year must be less than $4,050 (social
security does not count).
4. You must provide more than half of the person's total support for the
year.
There is a very good worksheet to help you determine how much support you provide.
It is on page 15 of IRS Pub. 501
http://www.irs.gov/pub/irs-pdf/p501.pdf