Can I put my child as non-dependent?

[global77]

I have always included my daughter as my dependent in my joint tax return with my husband.  In 2020, while still in school, she set up her own business started earning an income for herself. This time around, can I choose not to claim her as a dependent so she can file her own tax return?

If so, do I omit her particulars completely in my tax return? Or do I still have to include her details but claim her as a non-dependent?

Which section in Turbotax can this be done?

Thanks!

[xmasbaby0 · Accepted solution]

No.   If your child is not your dependent then you have no reason to enter anything about her on your tax return.  But the real question is whether she CAN be claimed as a dependent,   If she CAN be claimed then she can file her own tax return but must say on her own return that she can be claimed as someone else's dependent.

You have not provided enough information about your daughter for us.   You mention she is/was a student and that she has some self-employment income.   You have not said if she was a full-time student in 2020 or how old she was at the end of 2020---both of which are important.

IRS interview to help determine who can be claimed:

https://www.irs.gov/help/ita/who-can-i-claim-as-a-dependent

https://ttlc.intuit.com/questions/3113432-who-can-i-claim-as-my-dependent  

WHO CAN I CLAIM AS A DEPENDENT?

You can claim a child, relative, friend, fiance (etc.) as a dependent on your 2020 taxes as long as they meet the following requirements:

Qualifying child

•They are related to you.

•They cannot be claimed as a dependent by someone else.

•They are a U.S. citizen, resident alien, national, or a Canadian or   Mexican resident.

•They are not filing a joint return with their spouse.

•They are under the age of 19 (or 24 for full-time students).

• No age limit for permanently and totally disabled children

  •      They live with you for more than half the year (exceptions apply).

Qualifying relative

•They don't have to be related to you (despite the name).

•They cannot be claimed as a dependent by someone else.

•They are a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.

•They are not filing a joint return with their spouse.

•They lived with you the entire year.

•They made less than $4300  (not counting Social Security)

•You provided more than half of their financial support. More info

When you add someone as a dependent, we'll ask a series of questions to make sure you can claim them

If she can still be claimed as your dependent:

  He/she can file his own return for a refund of some of his withheld wages (he won’t get back anything for Social Security or Medicare), but MUST indicate on it that he can be claimed as a dependent on someone else’s return.  (Supervise this closely or prepare it for him!)

If your dependent’s earnings were over $400 and were reported on a 1099Misc or 1099NEC then he must file a return and pay self-employment tax for Social Security and Medicare.  You may want to use this version of TT for that:

https://ttlc.intuit.com/questions/1900583-what-is-turbotax-free-file-program

[xmasbaby0]

And...for your daughter:

https://ttlc.intuit.com/community/dependents/help/when-do-i-have-to-answer-yes-to-being-claimed-as-a...

[global77]

Yes, she was a full-time student in 2020.  And at the end of 2020, she was already past 18-years of age.

Can you explain to me the significance of these two questions of yours? Thanks

[xmasbaby0]

@global77 

Use the link from the IRS provided to you and read the criteria for claiming a dependent.   You still have not told us her age---only that she is "past 18."   A full-time student under the age of 24 can be claimed as a qualified child.  She is not limited by the $4300 income amount.   She can earn more and still be considered a qualified child if she is a full-time student under the age of 24.   

The rule is if the person CAN be claimed then they are supposed to say that on their own tax return.  It is not a matter of choice.  

If your daughter was a full-time student UNDER the age of 24 at the end of 2020 then she can still be claimed as a dependent on your joint tax return.  That means she can still file her own tax return but she must say that she can be claimed as someone else's dependent.   She is not eligible to receive stimulus checks.   The person (or the couple) who can claim her as a dependent can get the 3rd stimulus check for claiming her, and will get the $500 credit for other dependents.   And the education credits go on the return of the person who claims her as a dependent.

You say she had self-employment income.   That means she will be required  to file a return if she earned even $400, and she will need to pay self-employment tax for Social Security and Medicare, as well as ordinary income tax--depending on how much she earned.

[Opus 17]

You are never required to claim a dependent.  However, there is a legal requirement that if your daughter can be claimed as a dependent by someone else, she must answer "yes, I can be claimed as a dependent" on her tax return.  This will disqualify her from certain tax benefits including stimulus rebates. 

Meanwhile, your daughter will always file a tax return for income in her own name, even if she can be claimed as a dependent.  Filing a tax return does not, by itself, affect her ability to qualify as someone else's dependent, but her income and age may affect her status.

From your point of view, there is no benefit to not claiming her as a dependent if she qualifies, except in the case where she is a college student under age 24, and the parents' income is too high to qualify for the American Opportunity Tax Credit.  In this case, if the child can be claimed but is not claimed, the child may qualify for some AOTC that the parents don't.  This is the only tax situation where you may benefit from not claiming a child who can be claimed.  

[global77]

@xmasbaby0 I apologize for not being clear enough, yes, she was full-time student and age over 18 but short of 19 in 2020. 

After going through yours and @Opus 17 replies,  would it be fine if I do as follows:

1) In your first reply, you wrote as "If your child is not your dependent then you have no reason to enter anything about her on your tax return". Therefore, I will file my tax return without the need to mention my daughter or her details since I am not claiming her.

(With that, the issue of me not claiming her as dependent does not arise since she isn't included on my tax return. Did I got that correct?)

2) In the tax return that she will be filing on her own, she will answer "yes, I can be claimed as a dependent" on her tax return.

Would that be alright? Thanks again for your kind replies.

[Opus 17]

---

@global77 wrote:

@xmasbaby0 I apologize for not being clear enough, yes, she was full-time student and age over 18 but short of 19 in 2020. 

After going through yours and @Opus 17 replies,  would it be fine if I do as follows:

1) In your first reply, you wrote as "If your child is not your dependent then you have no reason to enter anything about her on your tax return". Therefore, I will file my tax return without the need to mention my daughter or her details since I am not claiming her.

(With that, the issue of me not claiming her as dependent does not arise since she isn't included on my tax return. Did I got that correct?)

2) In the tax return that she will be filing on her own, she will answer "yes, I can be claimed as a dependent" on her tax return.

Would that be alright? Thanks again for your kind replies.

---

1. If you don't want to claim her as a dependent, you don't have to.  That's all there is to it.  (You would never report her income on your tax return even if you did claim her as a dependent.)

2. Because she is under 19 as of December 31, 2020, she can be claimed by you, so she must answer "yes, someone else can claim me."

I don't know why you want to file this way.  Your daughter gains nothing unless she is in college and her income was more than $12,400.  You might be losing the ability to claim education credits, to file as head of household, and to claim earned income credit.  

[VolvoGirl]

@global77 

You said.......2) In the tax return that she will be filing on her own, she will answer "yes, I can be claimed as a dependent" on her tax return.

I think you are reading that wrong.  It's not that she is a dependent on her own tax return.  But on her tax return she has to check the box that says she can be claimed as someone else's dependent even if you do not claim her.  

Unless you have a specific reason  not to claim her, you should be claiming her.  She can still file her own return for her income.  

[xmasbaby0]

@global77

Given her age and that she is a full-time student,  it does not make sense for you not to claim your child. 

 She does not lose anything if you claim her---since she CAN be claimed she is simply not eligible for stimulus checks or education credits.   But if you DO claim her you are able to get education credit, the 3rd stimulus check of $1400, and the $500 credit for other dependents for claiming her.   And.....you might also be losing the earned income credit, depending on your income,  if you do not claim her.

She can (and must) file her own return for her self-employment income.   But she has to say in My Info that she can be claimed as someone else's dependent.   

[global77]

Based on everyone's viewpoints, looks like I will have to reconsider again the initial thought of not claiming her as a dependent. Thank you again for all your replies. 🙂