HSA Contribution for a earning child

[bagrawal1631]

My child had some income in 2019 but was covered by my high deductible family health plan. I believe the child is eligible to contribute family HSA contribution of $7100 for 2019 as long as he is not tax dependent on me. In other words, I cannot claim him as my tax dependent.  Pls validate this ?

Further if he files his own tax without my dependent on my 1040, how do I expense the college fee about $6K I paid in 2019? I also got the same amount ($6K) of distribution from his Education savings account (ESA). Should these amounts go in his 1040 filings? 

[BillM223]

The rule is that your child cannot contribute to an HSA if he/she COULD be claimed as a dependent. It is immaterial whether or not your child is actually claimed as a dependent; the test is on whether or not he/she could be.

"My child had some income in 2019" Did your child provide more than half of his/her own support? Please review the rules for a dependent starting on page 25 in IRS Publication 17.

I suspect that you will find that your child could be taken as a dependent, so there is no possible HSA contribution, and you might as well claim him/her as a dependent and take the education benefits, too.

[NCperson]

the college piece gets a little complicated. Please post the following and I will walk you through the math

• 1098T - Box 1 and Box 5
• 1099Q - Box 1 and Box 2
• Any other expenses that are not on Form 1098T / Box 1 - think Room and Board, Books, Computer Related expenses
• Confirm you are eligible for AOTC (joint income less than $160,000)

if you CAN claim him on your taxes, you will be better off; I will show you why when you provide the information above 

[bagrawal1631]

1098T Box1: $14965 

1098T Box5: $15750

Room and board (2019): $5730

Computer and Books (2019): $ 1734

Transportation and Meals: $2314

Graduate student

1099Q Box1: $6000

Yes eligible for AOTC

[NCperson]

please remove the transportation expense - it's not an eligible expense

also, if your child is a graduate student, why do believe you are eligible for AOTC? 

How old is the student?

whose social security number is on the 1099Q form? yours or the students? 

[bagrawal1631]

child is 21 yrs in 2019

1098T has Graduate student checked

1098Q has child's TIN

I thought AOTC is based on my income only. 

[NCperson]

@bagrawal1631 - -I reviewed your responses as well as the private message you sent below.  My concern is whether you are following the questions in turbo Tax to get to some of this information.  This is necessary to get to the right tax return; it's why Turbo Tax asks so many questions. 

I will guide you back to that approach (or get a CPA)

a few items

1) since you state you are married, yes, you can not file Head of Household.

2) your child's income GOES ON HIS TAX RETURN - not yours,

3) Graduate expenses are not eligible for AOTC

4) Determine if your child is still your dependent.  INCOME is NOT part of the test.  Some of the critical parts of the test (and again TT will take you through all these questions)  is that he is under 24, a full time student and you provide more than 50% of his support (from your comments below you appear to pass all these elements)

5) Some of the 1099Q Box 2 money is going to be taxable based on the sources and uses of money you provided me.  I can't provide specifics because a) transportation needs to be removed from the expenses and b) there is a complex maneuver that can be employed to take advantage of the lifetime learning credit IF it turns out your child can be claimed as your dependent. 

It might be best to get a CPA involved; it'll could save you more in paying taxes correctly than the cost of their service.  

Hi I have been communicating with you on my child's college expenses. Is it possible to file head of household even tho I am married and include my child's 2019 income in my tax return? Turbotax would not allow me to do so since I am married. My child's income from summer interntship in 2019 was over $30K but I paid for ALL the expenses and the child lived in dorm Jan19-May19 and then @ home while attending college and working part-time. I pay for all transportation (Uber rides), lodging, food, clothing, etc. Child is pursuing 4+1 program where they would be awarded Masters degree in 4 years. So the child has already completed Bachelors as of May'19 (in 3 yrs - fast track) and is now pursuing Masters which will be completed in May'20. The child is getting free ride from the college for Masters program, in fact some $1600 back per semester based on some fellowship awarded. The child started college Aug'16 after high school. I hope this info helps.