My parents can claim me but they didn't, should I still say 'Someone else can claim me?'

[lilytax0225]

When filling out the TurboTax form, I answered Yes to 'Someone else can claim me' and No to 'Will that person claim me' since my parents didn't claim me. But for some reason, later when I fill out HSA, I was told by the system that:

You told us you're claimed as a dependent on another person's return. This makes you ineligible to qualify for HSA deductions. 

I'm very confused, because I clearly said No when asked if my parents will claim me.... They did report my 1098t when filing for taxes though; I don't know if this has to do with anything related to this. 

Thanks!

[mesquitebean]

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@lilytax0225 wrote:

When filling out the TurboTax form, I answered Yes to 'Someone else can claim me' and No to 'Will that person claim me' since my parents didn't claim me. But for some reason, later when I fill out HSA, I was told by the system that:

You told us you're claimed as a dependent on another person's return. This makes you ineligible to qualify for HSA deductions. 

I'm very confused, because I clearly said No when asked if my parents will claim me.... They did report my 1098t when filing for taxes though; I don't know if this has to do with anything related to this. 

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If your parents CAN claim you, why didn't they?   And are you sure they didn't?   You said they reported your 1098-T, so are you saying they DID claim a credit for your qualified education expenses on their return?

I'm not a tax person, so I'm going to ask someone familiar with dependent situations, the dependent rules, and education expenses credits to assist you in figuring out your situation and how all that works, and also help with the HSA error.   It likely will not be tonight, but possibly in the morning.

In the meantime, in order that he can more fully understand your situation, you may wish to provide your age, approximate 2019 income, living situation, full-time student or not, and who provides more than half of your support--you or your parents.

@Hal_Al   Are you able to please help unravel this dependent/education credit/HSA situation when you are next in the forum?    Thanks!

[Hal_Al]

"They did report my 1098-T when filing for taxes though"

Then they claimed you as a dependent.  The parent is not allowed to claim the tuition credit or deduction, unless the student is their dependent.  That's a very common question here in the forum.

The HSA question is much less common and took a little research.  From Pub 969 (page 3): "You can’t be claimed as a dependent on someone else’s 2019 tax return"

https://www.irs.gov/pub/irs-pdf/p969.pdf

So even though TT uses the wording "You told us you're claimed as a dependent on another person's return", it really means you CAN be claimed as a dependent on another person's return

[lilytax0225]

Thanks @Hal_Al for your answer!

A little background about myself to help you understanding my situation: I graduated undergrad May 2019 from a full-time program and started working Sept 2019. I earned more than my parents so we thought I should file taxes separately. But they did support me most of the year--that is until I started working. 

I think I'm confused as to whether my parents claimed me or not. On the copy of the 1040 form that they got from the accountant, I'm not listed in the Dependents section. However, I'm listed in the Qualifying Child Information section. And I remember sending my 1098T to the accountant. In that case, did my parents claim me as a dependent?  If yes, do I still have to file for taxes? Or I'm just crazy-- being a dependent has nothing to do with filing taxes....

Regarding the HSA, I chose that plan when starting my job, and it's a self-plan not a family-plan. The contribution comes partly from my employer and partly from my paycheck deduction.  @AnnetteB6 mentioned in my other question that "If you can be claimed as a dependent, then you are not eligible to make any contributions to a Health Savings Account." I understand if I share this plan with my parents and if I'm a dependent, I can't contribute, but this is my own plan. Does that still apply and is the reason for the excessive contribution?

I read from another post that one reason for excessive contribution is duplication--entering 12w from the W2 and entering again when asked about personal contribution. But I've gone through the 1099-SA, HSA, MSA section several times and didn't come across the personal contribution question (and thus TT still says I have an excessive contribution of $3500 :( 

If you could shed any lights on my questions, I'd be very grateful (and much less frustrated on this becoming-an-adult process). 

Thanks again!

[Hal_Al · Accepted solution]

If you're not listed in the Dependents section, of their 1040, you were not claimed as a dependent.  Further verify this by looking at line 13a of their 1040.  It should be blank (unless they have other dependents).  Also look at line 3 of Schedule 3 to verify that they did not claim the education credit.  

I don't know what a "Qualifying Child Information section" is. It sounds like just an accountant's worksheet to see if you qualify.  Unless, there is a Schedule EIC with your name on it.

You have to file taxes whether you are a dependent or not, unless you had less than $12,200 of income, for the year, and have no withholding to be refunded.  

If your parents didn't claim you,  then answer no to  the question can you be claimed.  Then your HSA contribution is valid.

If you were claimed, then the reason for the excessive contribution is that your are not eligible for an HSA, because you are a dependent. 

Graduation year is always "iffy", as to whether a student can be claimed. Technically you should go thru the calculations to see if you can be. But, in reality, the parents and student simply decide between them who will claim you.  

If your parents didn't claim the tuition credit, you should claim it, on your return, if you  claim yourself. Do not claim the American Opportunity Credit, if your parents have already claimed in 4 times (a May graduation usually means you were in college 5 calendar/tax years).