Tax folks, is my daughter my dependent?

[dropzone]

She’s 21, full-time student, mostly full-time employee. She made (and pissed away) somewhere around $10,000 last year (and more in previous years) and, even taking into account the rent I don’t charge her and the car insurance I pay, I doubt if I spend that much to support this person who is mostly at home to sleep and do her laundry. Yet my wife calls me “stupid” to not write her off on my taxes. Am I stupid? I wouldn’t mind it if it meant I paid less taxes. I’ll even admit it on my claim form for overpayment in previous years, but I think I have it right.

[FatBaldGuy]

If she is living at home and not paying rent, you are undoubtedly providing more than 50% of her support.

If you claim her as a dependent, you will pay less in taxes.

BUT…
If you claim her as a dependent, she then cannot claim herself as a dependent, and will pay more taxes.

[Rigamarole]

Check out the IRS rules for a child to qualify as a dependent.

[TimeWinder]

@FatBaldGuy

If you claim her as a dependent, she then cannot claim herself as a dependent, and will pay more taxes.

Many people get this wrong (as FatBaldGuy did). It doesn’t matter whether or not you claim her as a dependent: if she meets the definition of a dependent (and it’s very likely she does), then she cannot claim her own deduction WHETHER OR NOT YOU CLAIM HER.

Lots of people think they can “choose” whether the child gets the deduction or not. They can’t.

Go to the IRS.gov web site, download “Publication 17.” This is basically the guide for tax preparers – the (much) more complete version of the instructions that came with your tax forms. There’s a flowchart in it for determining if she’s a dependent or not.

Actually, I recommend everyone (who pays US taxes) get this document. It will answer almost any question you might have about US Federal taxes. Most states have a publication 17.5 (or something similar) for the state version.

[Duckster]

Check out the PDF links at Child Tax Credit on the IRS web site.

According to Publication 972, she doesn’t qualify.

Who is a qualifying child?

All of the following tests must be met to claim someone as a qualifying child* for the child tax credit.

Relationship test:
The child must be your son, daughter, stepson, stepdaughter, legally adopted child or a child lawfully placed with you for legal adoption, brother, sister, stepbrother, stepsister, foster child placed with you by an authorized placement agency or by a court order, or a descendant of any such person.

Residency test:
You and the child must have the same principle place of abode for more than half of the year (except for temporary absences).

Age test:
The child must be under the age 17 by December 31 of the calendar year in which your tax year begins.

Support test:
The child may not have provided over half of his or her own support for the calendar year in which your tax year begins.

Citizen, resident, or national test:
The child must be a United States citizen, United States national, or a resident of the United States. An exception may apply if the parents of a child are divorced, separated, or living apart. See Publication 501, Exemptions, Standard
Deduction, and Filing Information.

[TimeWinder]

@Duckster

Check out the PDF links at Child Tax Credit on the IRS web site.

According to Publication 972, she doesn’t qualify.

The child tax credit and the dependent exemption use different rules (in particular, there’s a student clause for older children on the dependency one). I’m not a tax advisor, but I’m pretty sure she’s a dependent, since he provided a place to live (which will likely cover the 50% rule).

[FatBaldGuy]

Duckster, what you have posted is the qualifications for the Child Tax Credit, which is an entirely different thing from qualifying as a dependent.

TimeWinder, mea culpa. I guess I got that one wrong.

[scotandrsn]

IRS Publication 501 is your friend:

Qualifying Child

There are five tests that must be met for a child to be your qualifying child. The five tests are: 1. Relationship, 2. Age, 3. Residency, 4. Support, and 5. Special test for qualifying child of more than one person (unless you and your spouse file seperately, this last one is not an issue).
.
.
.
Relationship Test

To meet this test, a child must be:

*Your son, daughter, stepchild, eligible foster child, or a descendant (for example, your grandchild) of any of them, or
*Your brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant (for example, your niece or nephew) of any of them.

.
.
.
Age Test

To meet this test, a child must be:

*Under age 19 at the end of the year,
*A full-time student under age 24 at the end of the year, or
*Permanently and totally disabled at any time during the year, regardless of age.

.
.
.
Residency Test

To meet this test, your child must have lived with you for more than half of the year.
.
.
.
Support Test (To Be a Qualifying Child)

To meet this test, the child cannot have provided more than half of his or her own support for the year.

This test is different from the support test to be a qualifying relative, which is described later. However, to see what is or is not support, see Support Test (To Be a Qualifying Relative), later. If you are not sure whether a child provided more than half of his or her own support, you may find Worksheet 1 helpful.
Scholarships. A scholarship received by a child who is a full-time student is not taken into account in determining whether the child provided more than half of his or her own support.

[TimeWinder]

To summarize all this (I hope): she’s your dependent if you provided more than half of her support (she clearly meets all the other criteria), and since intangibles like room & board count, you’ll need the IRS worksheet (either the one in Pub 17 or the one in 501 will do, they should be the same) in order to figure out whether or not you did.

I’m still not a tax adviser, mind you.

[dropzone]

Digging up all the info for that worksheet will require far more effort than my taxes have required in years! Good thing my wife puts everything (food, clothes, etc) on one credit card and I can download statements going back years so I can just toss it into Excel.

Thanks, everyone!

[bouv]

@FatBaldGuy

If you claim her as a dependent, she then cannot claim herself as a dependent, and will pay more taxes.

Yeah, but considering her age, full-time student status, and small income, isn’t she entitled to get it all back anyway? I know the four years I was in college, I got every penny back (or just never paid any in the first place.)