Dependent Status

[acask]

Which status does my child meet if the following is true - dependent (my husband and I would claim him as a dependent) or independent (would file as single, and I would not claim him as a qualifying child)?

1) Age 17, attends high school currently

2) Works outside of the home in the summer months (W2 employee for the City)

3) Works as a 1099 employee for us (manages maintenance, repair and upkeep for our Swimply pool and backyard rentals). 

4) Lives at home, but pays rent to us for his room, utilities, food, etc. Through his work, he pays for over half of his living expenses.

His goal is to become independent. I think he qualifies, but it appears gray because of #3 and #4. Thoughts?

[xmasbaby0]

He is your qualified child dependent.   The "family cost sharing" arrangement you have with him is not entered on a tax return.  

MY DEPENDENT HAD A JOB

If your dependent has a W-2 for his after-school job, summer job, etc. you do not include the information on your own return. You can still claim your child as a dependent on your own return.  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!)

Your child also has self-employment income---according to you.   

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 might also want to use free software from the IRS Free File versions:

https://apps.irs.gov/app/freeFile/

[CatinaT1]

It depends.  A dependent must meet the requirements of a qualifying child or a qualifying relative in order for you to claim them on your tax return.  

Regardless, they will be able to file their own tax return.  However, if you claim them as a dependent, they will not be able to claim themself on their own tax return. 

The support test is one that I question. He could not have provided more than half of his own support during the year.

The tests for a qualifying child are: 

Relationship: Must be your child, adopted child, foster child, brother or sister, or a descendant of one of these (grand or nephew). 

Residence: Must have the same residence for more than half the year. 

Age: Must be under age 19 or under 24 and a full-time student for at least 5 months. They can be any age if they are totally and permanently disabled. 

Support: The dependent must not have provided more than half of their own support during the year. 

Joint Support: The child cannot file a joint return for the year. 

The tests for a qualifying relative are: 

Qualifying Child: They are not the “qualifying child” of another taxpayer or your “qualifying child.” 

Gross Income: The dependent being claimed earns less than $4,700 in 2023. 

Total Support: You provide more than half of the total support for the year. 

Member of Household or Relationship: The person (a friend, girlfriend, non-blood relative) must live with you all year as a member of your household or be related to you. 

TurboTax software will ask you simple questions and give you the tax deductions and credits for which you are eligible based upon your answers. 

See also these TurboTax Helps. 

Who Can I Claim as a Tax Dependent? 

Rules for Claiming a Dependent on Your Tax Return 

You may also want to view IRS Publication 501. Dependents, Standard Deduction, and Filing Information page 11 for 2023 

[xmasbaby0]

And....do you have the idea that there is some sort of tax advantage for your child to claim they are not your dependent---at age 17?   Why is this an issue?

[acask]

He plans to move out and is working to earn enough to not have to rent a room elsewhere, but he may still decide to do this. He earns almost $13K per year currently. We file a 1099 NEC for him. He has filed his own return for two years now becuase of his summer and in-school self-employment earnings. Last year he earned $8K.

I suggest he move out before he misses the 'residence' test which would mean he would not live at home for more than half the year. He plans to move in with his brother over the summer. Perhaps this will help him pass that test. He has a lot of past savings (our gifts to him) that he uses to supplement his income to live off of.

Does this provide more info to help me determine what is best for him? I am not concerned about my tax benefit (is not much, so...).

Thank you!

[Hal_Al]

Q. Which status does my child meet if the following is true - dependent (my husband and I would claim him as a dependent) or independent (would file as single, and I would not claim him as a qualifying child)?

 Through his work (his earned income), he pays for over half of his living expenses.

If it's true that he pays for more than half his support, then you would not be able to claim him as a dependent.  But that's highly unlikely and easily adjusted, so that you can claim him. 

What is it that you expect to gain by having him claim independent. 

With the tax law change, effective 2018, most students/dependents will get the same refund whether they claim themselves or not. The personal exemption has been eliminated and the standard deduction increased. He is not eligible for the Earned Income Credit, based on age. 

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

Money he put into savings does not count as support he spent on himself.

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.

[acask]

Thanks!!

Not trying to get a tax advantage either way - just trying to help him gain his independent status as that is what he desires and is working hard to earn. Hope that helps explain what I hope to gain...nothing for me. All about helping him get established as an adult with all the adult responsibilities that come with!

Sounds like if he really wants to earn that independent status, his best bet will be to go rent a room. Can I be a cosigner on him renting a room or will that count as 'support'? I guess he could try to rent a room from a friend, too...thoughts?

Thank you!!

[Hal_Al]

Q.  Can I be a cosigner on him renting a room or will that count as 'support'? 

A. Co-signing does not count as support, you provided.

Filing an independent tax return is a pretty minor item in feeling independent.  He gains nothing tax wise, but you lose the (up to) $500 Other dependent tax credit and possibly some earned income credit.