What do you do if your paretn are claiming you as a dependant even though you are not living at home?

Question

I have not lived at home for 3 years and I am workig during the college school yr. and taking out student loans to pay for my education. My parents keep claiming me on their taxes as a dependant and say they'll do so until I'm 24. I have aked the FA office and they said your parents cannot claim you to start with. They make well over 125K per year and are sticking me with 100% of the college expenses, when they suggested I go here in the first place and even said they'd pay for my education but now they decided to build a house and stick me with the debt. I figure it being around 50K when I graduate, do you feel this is the right thing for them to do? I feel at the very least they should at least pay towards the principal balance of the laons or at least give me whatever it is they are writing off a deduction. They claim b/c I'm on their insurace they'll contiune to do it even though the university has 100% medical coverage for full time students. This is a State U.

Answer 1

If you are supporting yourself, you are entitled to claim an exemption for yourself. If your parents are also claiming you on their return, the IRS will spot the duplication and require justification for the exemption from both parties. This sounds like a family feud as much as anything.

Answer 2

The debt you have taken on is not income, and will not generate a refund for you. So, what is it that you want to accomplish? If you want your parents to pay part of your student loan, this is outside of the tax code and the law. Your parents have no obligation to pay on your loan.

If you have provided over half of your own support, then you can claim yourself on your tax return. Does this provide any benefit to you? If you had only debt and little or no income, there is no benefit.

All you can do is amend your returns and cut your parents off. This will probably not put any money in your hands, from either the IRS or your parents.

Answer 3

Wow, your parents are in the wrong. While I don't support lying to the IRS, you are in a bad situation because if you report them, it would be unlikely you'll ever be able to repair the inevitable rift. Though they created the problem, it will be your "fault" to them.

From what you've said, it sounds like you've talked to them and they don't care. Here's something that they didn't think about. When you take out student loans AND you are working, you must be on the radar of the IRS. The IRS can go back 3 years, I believe, and if they do, they have your parents for tax fraud.

I don't know what kinds of services you have access to, but you might want to see if you can consult with a tax attorney (possibly calling the bar for a referral--probably get about half an hour for $50 or less) and find out if YOU are potentially in trouble as you are aware of this. If so, you probably need to present them with those facts. If it's only them on the line, you might want to share that info with them.

I'm not sure what they're thinking OR if you are even on their insurance for that matter. This is very troubling. In this case, I think you should seek out legal counsel.

Answer 4

Tell them you are going to claim yourself this year (2007) and do it as early as you can since you will probably get your W-2 before they get theirs and all their other related 1099s etc. If yours gets to the IRS first then you will get the deduction. If theirs gets to the IRS first then you will need to send yours in by mail with supporting documentation that you are not dependent on them.

The IRS will make a decision and if what you are saying is true they will have to pay back the IRS for any benefit received by claiming you. Usually the Tax Payer can claim himself. The IRS applies what they call "Tie Breaker" rules in such cases.

Now you also have to see if it will actually benefit you. Plug in your income etc. in one of the web sites that calculate taxes. If you don't really benefit then let them claim you because they will benefit more.

You can also go to a tax preparer such as H & R Block as soon as you get your W-2. You are not yet paying on the student loan so that doesn't matter. They will be able to tell you if claiming yourself benefits you.

Answer 5

Your explanation tells me you should go to the nearest IRS office and get a ruling. You will need to take your income tax return for the last 3 years or at least last year's. Explain the circumstances as you explained it above. They will make a ruling and then you can mail it to your parents so they can do the right thing in the 2007 filing. Do it quickly so your parents can have the correct ruling before January 1st. Personally I think you're right but I'm not the IRS. They are the keepers of these ruling.

Answer 6

If you provide more than 50% of your own support (including tuition!) then your parents cannot claim you even if you live under their roof. File your return and claim yourself. If your parents to do as well, the IRS will investigate the situation and award the exemption claim to whomever is entitled to it under the law. As long as you can prove that you provide more than half of your own support (remember, that INCLUDES tuition!) the IRS will give you the exemption and send your folks a bill for the taxes due due to the loss of the exemption.

BTW, if they claimed you last year but you provided more than half of your support you can file an amended return claiming yourself and get a few $$ back from the IRS. Of course, be prepared to prove your claim. Your folks will get a bill for last year PLUS penalties and interest for late payment as well. Ditto for tax years 2005 and 2004 IF you paid more than half of your own support for those years as well.

Answer 7

Tell them that you are taking the deduction yourself and that if they continue to claim you they will have to answer to the IRS.
Also you can file an amended return foing back 3 years (I think it's 3) to claim the additional money for yourself.

Answer 8

i basically kinda went by way of this kinda stuff.... the determine with custodial rights has dibs on claiming the dependant if no longer something has been agreed upon in court docket, yet technically if the daddy to that end needs to declare the youngster he could desire to devoid of backlash via no settlement being made between the two certainly one of you. the daddy might could desire to fill out the 8332 style while he filed as a fashion to declare the youngster. in maximum circumstances the father and mom attain an settlement and each determine will declare the youngster the different year. seems to be maximum honest. anyhow wish my experienc helped ya....