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mary6
New Member

Sounds like I can claim my 21 year old full time college son because I support over 1/2 of his expense. He made over $10k. Does he file his own income tax return?

 
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Sounds like I can claim my 21 year old full time college son because I support over 1/2 of his expense. He made over $10k. Does he file his own income 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!)

If your dependent’s earnings were over $400 and were reported on a 1099Misc then he must file a return and pay self-employment tax for Social Security and Medicare.  You may want to use this version of TT for that:

https://turbotax.intuit.com/taxfreedom/

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

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7 Replies

Sounds like I can claim my 21 year old full time college son because I support over 1/2 of his expense. He made over $10k. Does he file his own income 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!)

If your dependent’s earnings were over $400 and were reported on a 1099Misc then he must file a return and pay self-employment tax for Social Security and Medicare.  You may want to use this version of TT for that:

https://turbotax.intuit.com/taxfreedom/

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
Hal_Al
Level 15

Sounds like I can claim my 21 year old full time college son because I support over 1/2 of his expense. He made over $10k. Does he file his own income tax return?

"Sounds like I can claim my 21 year old full time college son because I support over 1/2 of his expense."
Yes, but that assumes he lives with you and did so for more than half the year. Time away at school counts as living with you.

$10,000 of income means he must file a tax return of his own. He does not claim his own exemption (he does not "claim himself"). He will, most likely, owe some tax.
mary6
New Member

Sounds like I can claim my 21 year old full time college son because I support over 1/2 of his expense. He made over $10k. Does he file his own income tax return?

Do I have to claim him in order to claim the 1099-Q payments from Qualified Education?
Hal_Al
Level 15

Sounds like I can claim my 21 year old full time college son because I support over 1/2 of his expense. He made over $10k. Does he file his own income tax return?

No. The beneficiary, of a 529 plan, may be a person who is not your dependent.

A 1099-Q is a whole new, complicated, issue.

For 529 plans, there is an “owner” (usually the parent), and a “beneficiary” (usually the student dependent). The "recipient" of the distribution can be either the owner or the beneficiary depending on who the money was sent to. When the money goes directly from the Qualified Tuition Plan (QTP) to the school, the student is the "recipient". The distribution will be reported on IRS form 1099-Q.
The 1099-Q gets reported on the recipient's return.** The recipient's name & SS# will be on the 1099-Q.
Even though the 1099-Q is going on the student's return, the 1098-T should go on the parent's return, so you can claim the education credit. You can do this because he is your dependent.
You can and should claim the tuition credit before claiming the 529 plan earnings exclusion. The educational expenses he claims for the 1099-Q should be reduced by the amount of educational expenses you claim for the credit.
But be aware, you can not double dip. You cannot count the same tuition money, for the tuition credit,  that gets him an exclusion from the taxability of the earnings (interest) on the QTP. Since the credit is more generous; use as much of the tuition as is needed for the credit and the rest for the interest exclusion. Another special rule allows you to claim the tuition credit even though it was "his" money that paid the tuition.
In addition, there is another rule that says the 10% penalty is waived if he was unable to cover the 529 plan withdrawal with educational expenses either because he got scholarships or the expenses were used (by him or the parents) to claim the credits. He'll have to pay tax on the earnings, at his lower tax rate (subject to the “kiddie tax”), but not the penalty.

Total qualified expenses (including room & board) less amounts paid by scholarship less amounts used to claim the Tuition credit equals the amount you can use to claim the earnings exclusion on the 1099-Q.
Example:
  $10,000 in educational expenses(including room & board)
   -$3000 paid by tax free scholarship
   -$4000 used to claim the American Opportunity credit
 =$3000 Can be used against the 1099-Q (usually on the student’s return)

Box 1 of the 1099-Q is $5000
Box 2 is $600
3000/5000=60% of the earnings are tax free
60%x600= $360
You have $240 of taxable income (600-360)

**Alternatively; you can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. Again, you cannot double dip!  When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. It will prepare a 1099-Q worksheet for your records, in case of an IRS inquiry.
mary6
New Member

Sounds like I can claim my 21 year old full time college son because I support over 1/2 of his expense. He made over $10k. Does he file his own income tax return?

This is complicated! Last two year TurboTax just walked me through.  Let me ask one more question before I let a tax preparer handle this. This is first time he has $10k income.  Expense is about $22k, 1099-Q is $17k, box 2 is $4.5k.
Hal_Al
Level 15

Sounds like I can claim my 21 year old full time college son because I support over 1/2 of his expense. He made over $10k. Does he file his own income tax return?

Your numbers are perfect. You can claim the American Opportunity Tution Credit (assuming you are otherwise eligible) and none of the 1099-Q will be taxable.

If the 1099-Q goes on your return (because you are the recipient), enter it before you enter the 1098-T. The interview process goes smoother.  Enter at Deductions & Credits/Education/ ESA and 529 Qualified Tuition Programs (or type> 1099-Q <in the search box).
mary6
New Member

Sounds like I can claim my 21 year old full time college son because I support over 1/2 of his expense. He made over $10k. Does he file his own income tax return?

Thank you so much!
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