Dependent status of working college student?

Question

21 yr old daughter was full time student for 1 semester, lived at home all year. Worked second half of year making 18K.
Can mom claim her as dependent? Does mom's wage amount (31K) make a difference?
Overall, mom claiming her would make a $1000 increase in our total refund rather than her claiming herself. I
t seems to me that a lot of May/August college grads & parents would be in this tax situation.

Answer 1

If the daughter provided over half of her own support for the year, then no, her parent couldn't claim her. There is a worksheet in IRS Publication 17 to calculate support.

Yes, a lot of May grads and their parents probably are in this situation. And each family needs to determine whether the grad is a dependent or not, using the rules that are the law.

Answer 2

This is the 5 month rule...In order for the mom to claim the daughter as a dependend, the daughter would need to be enrolled full time in school for any 5 month period of that calendar year. If the semester lasted 5 months and all the 5 months fell in 2006 then the mom can claim her as a dependent. This goes for any student under the age of 24.

Answer 3

I was in this situation, with a twist. My son decided after graduation to work part time and take another course. I made sure that I can justify claiming the over 1/2 support for the year and the over 1/2 year residency requirement and therefore claim the dependent, the exemption, and the tax credit.

It makes a big difference what daughter did with her 18K. Mom has to be able, in principle, to show over 1/2 support. If a large part of the 18K was saved, it should be easy. If it was spent, it gets a lot harder for Mom to claim over 18K of support out of her own 31K.

Answer 4

That is a really great question. I can only answer to what I know.

When a student applies for financial aid, they are considered a dependant until they are 24 years old, whether they live at home or not, unless they have children of their own. Parents are still required to fill out financial aid paperwork for the student, even if they aren't taking out loans for the student to help them pay for school. The parents income is used to determine the students eligibility for financial aid up to age 24.

Now, it would seem to me if the federal government considers them a dependant before offering any financial aid for college, then the IRS should do the same.

Course, we all know that governmental departments don't play well together, so who knows!

Those are my thoughts...good luck!