DEPENDENTS

[MICKEY79]

I supplied more than half of my daughters support during 2020.  Am I required by law to claim her as a dependent or can she file on her own. She has both earned and un earned income.

[macuser_22]

Depends on her age and if you *can* claim her even if you do not she cannot claim herself.

There are two types of dependent and yiu have not provide enough information to tell.

Here are both requirements.

---Tests To Be a Qualifying Child---
(Must pass ALL of these tests)

NOTE: If a child passes all of these tests he must say “yes” on his/her own tax return (if he/she files one) that another taxpayer CAN claim him/her as a dependent even if they DO NOT claim him/her)

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 2020, (b) under age 24 at the end of 2020 and a full-time student* for any part of 5 months of 2020, or (c) any age if permanently and totally disabled and must be younger than you (or your spouse if filing jointly).

3. The child must have lived with you for more than half of the year (There are exceptions for temporary absences such as school, illness, business, vacation, military service).

4. The child must not have provided more than half of his or her own support for the year.
See Worksheet 3-1. Worksheet for Determining Support
https://www.irs.gov/publications/p17#en_US_2020_publink1000171012

5. 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.

6. The child is not filing a joint return.

7. The child must be a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico

*A full-time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance during some part of each of any 5 calendar months of the year.

See IRS Publication 17 for more information.

https://www.irs.gov/publications/p17

========================

---Tests to be a Qualifying Relative (& Unrelated Persons)---
(Must meet ALL of these tests to be a dependent)

1. The person cannot be your qualifying child or the qualifying child of any other taxpayer.

2. The person either must be related to you, or must live with you all year (all 365 days - There are exceptions for temporary absences such as school, illness, business, vacation, military service) as a member of your household.

3. The person's gross income for the year must be less than $4,300 (tax-exempt income, such as certain social security benefits, is not included in gross income)

4. You must provide more than half of the person's total support** for the year.

5. The person is not filing a joint return.

In any case, the person must be a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico

The above is simplified; see IRS Publication 501 for full information.
https://www.irs.gov/pub/irs-pdf/p501.pdf

** Pub 501 Worksheet 2 for determining support
https://www.irs.gov/publications/p501#en_US_2020_publink1000292527

[MICKEY79]

I apologize for not being clear.  My daughter was 18 in 2020 and is a full time student with both earned and unearned income.

I do pay over 50% of her expenses but I was looking at having her claim herself as a dependent ( and I would  NOT claim her).  Because of the Stimulus credit (and Kiddie tax rules and education credits) this results in a larger refund than if I claimed her as dependent on my return.

[macuser_22 · Accepted solution]

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@MICKEY79 wrote:

I apologize for not being clear.  My daughter was 18 in 2020 and is a full time student with both earned and unearned income.

I do pay over 50% of her expenses but I was looking at having her claim herself as a dependent ( and I would  NOT claim her).  Because of the Stimulus credit (and Kiddie tax rules and education credits) this results in a larger refund than if I claimed her as dependent on my return.

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She cannot claim herself if you *can* claim yer even if you do not claim her - the tax law does not permit that.

In fact there are special questions just for that in the personal information section:  1) CAN you be claimed as a dependent by another taxpayer?; and 2) Were (or will you be) claimed by that taxpayer?

If #1 is yes then the student cannot claim them self.

If #1 is yes and #2 is no, then the student still cannot claim them self but there are certain educational credits normally claimed by the parent that the student can claim.   That is the only difference.

And the "kiddie tax" applies whether the child is claimed or not.   Being a dependent  or not does not change that if the kiddie tax is triggered.

[MICKEY79]

Thank you for your very detailed response. It wasn't the answer I was hoping for but it makes sense.  I can still look at optimizing  our families Education tax credits  based on how we handle my daughter as a dependent.

[macuser_22]

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@MICKEY79 wrote:

Thank you for your very detailed response. It wasn't the answer I was hoping for but it makes sense.  I can still look at optimizing  our families Education tax credits  based on how we handle my daughter as a dependent.

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Since students typically do not have much earned income, educational credits usually benefit the parent much more than the student since most credits are based on AGI and taxable income.

Even with the "kiddie tax" and enough unearned income to require filing a tax return, the student might not have enough taxable income after the standard deduction to have any tax at all. 

Because the kiddie tax cannot be reported using the TurboTax free version then (unless yiu are using the desktop version I would suggest the IRS "FreeFile".   https://apps.irs.gov/app/freeFile/