With the exception of a possible child tax credit, is there any other benefit for claiming a child (or anyone else for that matter) as a dependent if that person has their own income?

Thinking about things like standard deduction, education tax credits, stimulus check eligibility, savers tax credits, etc. that they could get but parent/guardian has phased out of.

Run it both ways and see.

However, under IRS guidelines there should only be one person who can claim another as a dependent. The 50% rule is the qualifier. Assuming all other conditions are met, either the dependent or you provided over 50% of support.

I don't think that is accurate.

In 2020, I supported my youngest stepdaughter more than 50%. She was not in college, and earned more than $4000 (or $4500). I thought I could take a deduction for her...but my CPA said I could not because she was not in college.

ToddyHill said:

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I don't think that is accurate.

In 2020, I supported my youngest stepdaughter more than 50%. She was not in college, and earned more than $4000 (or $4500). I thought I could take a deduction for her...but my CPA said I could not because she was not in college.

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You are 100% correct. My comment is based on all other qualifications being met. If you are trying to claim a dependent other than a qualifying child (under 18 or under 23 but student), then the person must meet the qualifying relative standards. One of the exclusions there is indeed they cannot make more than $4,300 (tax years 2020 and 2021).

Best bet is to go to IRS website and go through their tool. It should wind up with a clear answer either way. The only area I have heard of arguments is who is paying more than half. Happens between parent / child and between divorced parents. The latter is usually agreed to during divorce.

My question is do I HAVE to claim my child if I don't want to (this is assuming I am eligible to do so)?

Other than the possible $2000 credit, there is no benefit to me for claiming the child, and regardless of income that goes away in the year they turn 18. However, there are benefits to the child if they can check that no one claims them.

cjsag94 said:

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With the exception of a possible child tax credit, is there any other benefit for claiming a child (or anyone else for that matter) as a dependent if that person has their own income?

Thinking about things like standard deduction, education tax credits, stimulus check eligibility, savers tax credits, etc. that they could get but parent/guardian has phased out of.

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those are the two biggies. Whomever claims the child (whether you are themselves) gets these.

ToddyHill said:

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I don't think that is accurate.

In 2020, I supported my youngest stepdaughter more than 50%. She was not in college, and earned more than $4000 (or $4500). I thought I could take a deduction for her...but my CPA said I could not because she was not in college.

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True unless she lived at home with you.

cjsag94 said:

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My question is do I HAVE to claim my child if I don't want to (this is assuming I am eligible to do so)?

Other than the possible $2000 credit, there is no benefit to me for claiming the child, and regardless of income that goes away in the year they turn 18. However, there are benefits to the child if they can check that no one claims them.

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Very few instances where this comes out in your overall favor. 2020 is a unique year because of the stimulus. We filed a lot of college students or college age on their own for the first time to claim the stimulus. younger than college - doesn't make sense.

So, am I to assume that the answer to my question is you do not have to claim your dependent children as dependents on your taxes if you don't want to? I have had 1 CPA tell me that you do, but much like this discussion, the reasoning was all about the qualifications that allow you to do so and not an answer that said yes, you have to if you can.

If the IRS audited you or your 19 year old college student child, would there be an issue if you stopped claiming them while you were still supporting them?

cjsag94 said:

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So, am I to assume that the answer to my question is you do not have to claim your dependent children as dependents on your taxes if you don't want to? I have had 1 CPA tell me that you do, but much like this discussion, the reasoning was all about the qualifications that allow you to do so and not an answer that said yes, you have to if you can.

If the IRS audited you or your 19 year old college student child, would there be an issue if you stopped claiming them while you were still supporting them?

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I have never heard of being required to claim a dependent. I am pretty sure the IRS would let you file your taxes with no exemptions / deductions / credits and pay taxes against your full income, if you so choose to.

I am not an accountant by the way. But that is just my understanding.

jtraggie99 said:

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cjsag94 said:

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So, am I to assume that the answer to my question is you do not have to claim your dependent children as dependents on your taxes if you don't want to? I have had 1 CPA tell me that you do, but much like this discussion, the reasoning was all about the qualifications that allow you to do so and not an answer that said yes, you have to if you can.

If the IRS audited you or your 19 year old college student child, would there be an issue if you stopped claiming them while you were still supporting them?

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I have never heard of being required to claim a dependent. I am pretty sure the IRS would let you file your taxes with no exemptions / deductions / credits and pay taxes against your full income, if you so choose to.

I am not an accountant by the way. But that is just my understanding.

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This is correct

gigemhilo said:

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jtraggie99 said:

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cjsag94 said:

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So, am I to assume that the answer to my question is you do not have to claim your dependent children as dependents on your taxes if you don't want to? I have had 1 CPA tell me that you do, but much like this discussion, the reasoning was all about the qualifications that allow you to do so and not an answer that said yes, you have to if you can.

If the IRS audited you or your 19 year old college student child, would there be an issue if you stopped claiming them while you were still supporting them?

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I have never heard of being required to claim a dependent. I am pretty sure the IRS would let you file your taxes with no exemptions / deductions / credits and pay taxes against your full income, if you so choose to.

I am not an accountant by the way. But that is just my understanding.

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This is correct

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Correct, you don't "have" to claim them. But if you choose not to claim them when you could, they should still check the box that says someone CAN claim you

In summary, It doesn't ask if someone DID claim you, it asks if someone CAN claim you

CPA here. Claim your kids you don't have to but you should so that a scammer doesn't claim them and block you from doing it in the future.

CPAAg said:

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CPA here. Claim your kids you don't have to but you should so that a scammer doesn't claim them and block you from doing it in the future.

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Very valid point

gigemhilo said:

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ToddyHill said:

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I don't think that is accurate.

In 2020, I supported my youngest stepdaughter more than 50%. She was not in college, and earned more than $4000 (or $4500). I thought I could take a deduction for her...but my CPA said I could not because she was not in college.

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True unless she lived at home with you.

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That's weird. Everything I read was that kids do not have to file unless they make over $9K. So if they don't have to file, you should be able to claim them if you are still supporting them.

I f'n HATE our tax laws. It's so convoluted it makes me want to cheat every damn year. Ridiculous.

TJaggie14 said:

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That's awesome!

PearlJammin said:

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gigemhilo said:

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ToddyHill said:

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I don't think that is accurate.

In 2020, I supported my youngest stepdaughter more than 50%. She was not in college, and earned more than $4000 (or $4500). I thought I could take a deduction for her...but my CPA said I could not because she was not in college.

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True unless she lived at home with you.

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That's weird. Everything I read was that kids do not have to file unless they make over $9K. So if they don't have to file, you should be able to claim them if you are still supporting them.

I f'n HATE our tax laws. It's so convoluted it makes me want to cheat every damn year. Ridiculous.

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If they are over 18, they either have to be a college student or live with you AND you provide more than half their support in order for you to claim them as a dependent.

gigemhilo said:

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PearlJammin said:

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gigemhilo said:

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ToddyHill said:

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I don't think that is accurate.

In 2020, I supported my youngest stepdaughter more than 50%. She was not in college, and earned more than $4000 (or $4500). I thought I could take a deduction for her...but my CPA said I could not because she was not in college.

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True unless she lived at home with you.

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That's weird. Everything I read was that kids do not have to file unless they make over $9K. So if they don't have to file, you should be able to claim them if you are still supporting them.

I f'n HATE our tax laws. It's so convoluted it makes me want to cheat every damn year. Ridiculous.

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If they are over 18, they either have to be a college student or live with you AND you provide more than half their support in order for you to claim them as a dependent.

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Actually you don't have to provide more than half their support. They just can't provide more than half of their own support.

So other than any tax credit you may receive.. is there any other reason/benefit to continue to claim them? The issue of scammers claiming my child is unfortunate, but I'm not sure I would make a decision that was potentially several thousand $s of additional tax to avoid that risk.

cjsag94 said:

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So other than any tax credit you may receive.. is there any other reason/benefit to continue to claim them? The issue of scammers claiming my child is unfortunate, but I'm not sure I would make a decision that was potentially several thousand $s of additional tax to avoid that risk.

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The reason to claim is that if you CAN claim them, then they can't get all those credits. The law asks them if the CAN be claimed by someone else.

But, there are plenty of 20-22 year olds filing themselves this year rather than as a dependent to get the $1200 and $600 stimulus.

Here's a typical breakdown of $$
Parent claims child
Assume Parent income is not phased out of education credit
$2500 education credit and $500 Other Dependent Credit =$3000. If the parent is single and has no other dependents then claiming the child also gets Head of Household filing status and tax brackets

Child claims themselves:
$1000 refundable education credit + 1800 stimmy =$2800

So if the education credit is allowed and the child has less than $12k income, it's better to just keep claiming the child.

But if phased out of the education credit due to income, it would be best financially to let the child file as not being claimed. But again the law says CAN not DID. So in reality this isn't supposed to be a choice for the child.

cjsag94 said:

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So other than any tax credit you may receive.. is there any other reason/benefit to continue to claim them? The issue of scammers claiming my child is unfortunate, but I'm not sure I would make a decision that was potentially several thousand $s of additional tax to avoid that risk.

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Just curious, but why do you think claiming them would result in several thousand additional in tax being paid? You've actually done the math and that's the outcome?

What if a grandparent paid for their education last year. Can you claim the education credit?

PearlJammin said:

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What if a grandparent paid for their education last year. Can you claim the education credit?

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Whomever claims the child gets the credit for education.

jtraggie99 said:

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cjsag94 said:

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So other than any tax credit you may receive.. is there any other reason/benefit to continue to claim them? The issue of scammers claiming my child is unfortunate, but I'm not sure I would make a decision that was potentially several thousand $s of additional tax to avoid that risk.

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Just curious, but why do you think claiming them would result in several thousand additional in tax being paid? You've actually done the math and that's the outcome?

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See Lockett's illustration.

With the kids gets claiming them himself, and the parent is phased out. Zero tax benefit for parent netted out with $2800 benefit to child.

My several thousand dollars wasn't just on my taxes, but the combined effect.

As I've read it, there is also the savers tax credit is you have a child 18 or over and not a student. Making less than $19k I believe, $1000 credit with a $2000 IRA contribution.

Back to the CAN vs DID comment above. I think my question all boils down to that technicality. In an audit, I guess CAN would win the case.