Our son graduated college in May 2024. He still lives at home with us. He started a job this fall. Is he still a dependent for the 2024 tax year?

[satscout1]

We know that for 2025 he will be classed as independent, but for the first part of 2024 he was still a student. We all live together in the same house, and once we get past tax season we will be discussing how he will contribute to the household expenses etc. We just aren't sure the best way to file for the 2024 year, whether on his/our forms to claim him as a dependent even though he did not have a job until the last few months of the year, or if he made too much money in those few months to legally be a dependent for the tax year. (He nets about 2400 a month.) I don't know where to find the legal requirements for this so thought I would ask here.

[Mike9241]

you can claim him as a qualifying child if all these tests are met
• if he is not a full-time student, he's under 19 at the end of the tax year. If a full-time student, he's under 24 at the end of the tax year. (full-time means he attended school – (online courses and correspondence schools don’t count) during any part of five calendar months during 2024)
• he hasn't provided over ½ his/her own support
• he didn't file a joint return if there is a tax liability

or you can claim him as a qualifying relative if all these tests are met
• his gross income for 2024 is less than $5,050
• you provided over ½ his/her support

support

Includes amounts spent for food, lodging, clothing, education, medical and dental expenses, recreation, transportation and other necessities

His income must be reported on his return. To do this if you are using Online he will need his own account.

Using the same Online account destroys the first return prepared when a second one is started. His account will need a unique ID though you can use your e-mail address.

with the desktop versions, you can prepare multiple returns.  

[Hal_Al]

Can the student be claimed as a dependent in the 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. 

There are two types of dependents, "Qualifying Children"(QC) and Other ("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, student status, a relationship test and residence test. Only a QC qualifies a taxpayer for the Earned Income Credit.

The rule is that a child of a taxpayer can still be a “Qualifying Child” dependent, regardless of his 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. he did not provide more than 1/2 his own support  (scholarships are considered 3rd party support and not support provided by the student). 
3. lived with the parent (including time away at school) for more than half the year

So, it usually hinges on "Did he provide more than 1/2 his own support in 2024.

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  (page 15)

[satscout1]

He turned 24 in March 2024 and graduated with his B.S. in mechanical engineering in May 2024. He has lived with us at home the entire time and still does. Even when he got a job, the household expenses have heretofore continued to be paid by us - we have not yet transitioned into a situation where he will contribute, but plan to discuss that after we get done filing taxes (can't yet because most of the paper trail won't get here until the end of January of course). That's part of what makes this muddy - does "under 24" include 24 itself? I'll check out that Pub 501 worksheet later.

[KrisD15]

No, not as your qualifying child.

The age requirement for claiming a dependent as your "Qualifying Child" is determined at the end of the Tax Year, so on December 31st. 

According to the IRS:

A qualifying Child is..."A student under age 24 at the end of the year and younger than you (or your spouse if filing jointly); or • Permanently and totally disabled at any time during the year, regardless of age."

The second option to claiming a dependent is if they are your "Qualifying Relative". 

A Qualifying Relative does NOT have the age restriction but DOES have an income restriction of $5,050 for the tax year. 

If your son was 24 (or older) on December 31, 2024 and earned $5,050 in 2024, that person is NOT your dependent.