Earned Income and GI Bill

[helpingmetaxes]

I'm a 22 year old college student and my parents aren't claiming me on their return.  I live in an apartment on my own and between my summer job earnings ($7200 in 2021) and the GI Bill I provide all my support.  How should I answer your tax software question asking if my earned income provides over half my support?    Thank you.

[ColeenD3]

Money from the GI Bill is not earned income.

If you're a service member or a veteran with an honorable discharge, the GI Bill may provide funding to help with college costs.  The benefits can add up to thousands of nontaxable dollars that you do not have to report as income on your individual income tax return (Form 1040).

If you are not a full-time student, then you made too much money to be claimed as a dependent.

See the rules for Qualifying Child

• Are they related to you? The child can be your son, daughter, stepchild, eligible foster child, brother, sister, half brother, half-sister, stepbrother, stepsister, adopted child, or an offspring of any of them.
• Do they meet the age requirement? Your child must be under age 19 or, if a full-time student, under age 24. There is no age limit if your child is permanently and totally disabled.
• Do they live with you? Your child must live with you for more than half the year, but several exceptions apply.
• Do you financially support them? Your child may have a job, but that job cannot provide more than half of her support.
• Are you the only person claiming them? This requirement commonly applies to children of divorced parents. Here you must use the “tie-breaker rules,” which are found in IRS Publication 501. These rules establish income, parentage, and residency requirements for claiming a child.

[helpingmetaxes]

Thank you. I am a 22 year old full time student and I lived the entire year of 2021 in an apartment in another city ~120 miles from my parents.  Also, my parents provided less than half my support in 2021.  My parents aren't claiming me as a dependent on their return.  Most of my support comes from the GI Bill, with the rest of my support coming from the $7200 I made over the summer.  My main 2 questions from the tax software interview are:  I can't be claimed as a dependent?  The other:  Is your earned income less than half the support you received?  Technically my earned income of $7200 was less than half because the GI Bill provided most of my support.  I assume since the GI Bill isn't taxable that I still answer the question "no."  

[DianeW777]

The answers to your questions are as follows and it's important for you to know that there are issue you must be prepared to verify.

To reiterate the information from our Tax Expert @ColeenD3:

• If you are not a full-time student, then you made too much money to be claimed as a dependent. 

Also, see the rules for a qualifying child, specifically: 

• Do they live with you? Your child must live with you for more than half the year, but several exceptions apply.  Temporary absences would not prohibit your parents from claiming you unless there was no intent to move back home.  You must make this determination and be prepared to show proof.

1. No, you cannot be claimed as a dependent if you are not a qualifying child.  You indicated you did not live with your parents the entire year so refer to intent to eliminate 'temporary absence'.
2. 14-10-115(5)(a)(I)) explicitly address whether GI Bill benefits count as income. The monthly stipend is treated as income when calculating child support or alimony, but not the tuition assistance or book stipend. 
   • This means that it is counted as part of the funds available to be used for support, but not included in taxable income. Although this refers more to divorce, it's a clear point it is considered support and for you it is from your own sources and not your parents.

Tax-exempt income.

In figuring a person's total support, include tax-exempt income, savings, and borrowed amounts used to support that person. Tax-exempt income includes certain social security benefits, welfare benefits, nontaxable life insurance proceeds, Armed Forces family allotments, nontaxable pensions, and tax-exempt interest.

• IRS Publication 501 Review the qualifiers for dependents