Worksheet for Determining Support - College Student Living Away from Home

[vp18276shm_fh]

Hi, I am a resident of State A and full-time undergrad student in State B.

As such, I live in B for 9 months a year as a full time student (intending to return to my home of A, making these 9 months living in B for "temporary or transitory purposes" as well as working an internship in B during the summer.

I was wondering how the "Expenses for Entire Household (where the person you supported lived)" would be calculated, since I am only physically at home for no more than 1 month per year (during school breaks, etc.).

I pay room and board during the school year through a 529 plan (which should end up on line 15) and pay rent during the summer for my internship.

How should I go about filling out the worksheet correctly to avoid "double-counting" costs? I want to make sure the actual amount spent on support is correct, and not overestimated.

[Affordabletaxes2021]

Who contributed to the 529 plan? Normally temporary absence from home includes living on campus and even summer internships for purposes of determining dependency. 
Do your parents normally claim you in their tax return? 

[vp18276shm_fh]

Hi,

My parents contributed to the 529 plan, and they normally claim me on their tax return. There is no question that I do not actually provide half of my own support for the year 2024.

However, I plan to **not** have my parents claim me as a dependent, and will the claim the **non-refundable** AOTC this year (**making sure to indicate that I can - but choose to not - be claimed as a dependent**).

The purpose of filling out this worksheet is to substantiate the claim that my earned income is greater than half of my support (for purposes of the "Kiddie Tax") - which it likely is, but not by a large margin. (My earned income for 2024 should be over 40 k). I would like to ensure that I am calculating the cost of my support correctly, and not double counting expenses like food (e.g. food eaten at home for 1 month a year vs. food purchased while away from home) or housing expenses (e.g. room and board, summer internship rent vs. 1 month of living at home).

[Hal_Al]

The test is not whether "your earned income is  greater than half of your support"; it's whether more than half your support comes from your earned income. But, that is probably academic since your are only claiming the non refundable AOTC and you already said "There is no question that I do not actually provide half of my own support for the year 2024."  The support from earned income issue only applies to eligibility for the refundable  portion of the AOTC*. 

As a student-dependent, away from home, for school, you are only considered as temporality away from home. As such, the support value of that home counts as support for the whole year, not just the time you are actually there. The support value of the home, provided by the parent, is the fair market rental value of the home plus utilities  divided by the number of occupants, including the student.

Money the student puts into savings and investments does not count as support he spent on himself.

The treatment of expenses paid with distributions from Sec. 529 plans and Coverdell ESAs in the support test is uncertain because of the dual nature of these college savings vehicles and a lack of IRS guidance. The consensus among tax experts is that it is parental support, because the parent is the owner of the plan. 

* A student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit (AOTC) if he/she supports himself by working. She cannot be supporting herself on student loans & grants and 529 plans and parental support.  It is usually best if the parent claims that credit.  

If the student actually has a tax liability, there is a provision to allow him to claim a non-refundable tuition credit. But then the parent must forgo claiming the student as a dependent, and the $500 other dependent credit.  The student must still indicate that he can be claimed as a dependent, on his return. This is worth up to $2500 (AOTC shifts to all non refundable).  

[vp18276shm_fh]

It seems like the support value of the home is (unfortunately) double counted, along with the cost of room and board for the school year and the cost of rent for the summer.

In the case of line 7 (total food expenses), does this entail counting food expenses that **I do not consume at all**, given that I am not home for 11 months of the year? Would food expenses have to be double counted as well? This doesn't make sense.

[SteamTrain]

also, Make sure you re-read all of the @Hal_Al response.

i.e will you really have ~$43,000 of "earned" income from actually working jobs??

[vp18276shm_fh]

Yes, I will have around that amount of earned income. Based on @Hal_Al's response, the food will probably have to be double counted as well.

[Hal_Al · Accepted solution]

Q. Would food expenses have to be double counted as well? 

A.  No. Count only your actual food.  Housing is "double counted" because your parents still have the expenses, of providing shelter, even though you are not physically there (you are still considered as an occupant).  The cost of your "room", at school, is an additional expense.

I added a couple of other points to my original reply (about savings not being support and how 529 plans are treated for support).

Basically, you have no need to go through this exercise, if you know, for sure,  that "there is no question that I do not actually provide half of my own support for the year 2024".

[vp18276shm_fh]

Thanks for the clarification! And yes, regarding 529 plan distributions, I do think it makes sense to consider them parental support.