Ask Terry Questions dependency exemption for 2017 for daughter

dependency exemption for 2017 for daughter

By Terry Savage on March 23, 2018 | College Savings / Student Loans

Here I am again asking a question for my niece. One of her daughters graduated Willowbrook High School in late May of 2017. She turned 19 in October of 2017. She meets the IRS definition of full-time student (“A full-time student is one who is enrolled for some part of five calendar months for the number of hours or courses which is considered to be full-time attendance…”) but was not a full-time student on December 31, 2017. This daughter did not choose college after graduation last spring.I think she qualifies as a dependent but her accountant says no. I’ve researched this thru the IRS website, doing the interactive questionnaire and their instructions for preparing the 1040 as well as through Turbo Tax and unless she had to be a full time student on December 31, 2017 (which appears to be a matter of interpretation) I think she qualifies.

Terry Says

Oops, this is tricky -- and I would check with YOUR accountant, since you want to claim her as a dependent.   But here's a link to the Journal of Accountancy article on that subject.  Since she was a full time student for at least five months, it appears you can claim her as a dependent.  BUT, there may be advantages for her in being independent -- especially if she is earning money and paying taxes.  Why don't you talk to both your, and her, accountant and see why she would want to be considered an independent adult.  Maybe she is planning to go back to school, and could claim more financial aid as an independent student.  A lot of other circumstances must be considered -- including whether she is living with you, and you are providing support.   So I don't want to get in the middle of this -- but do have the professionals air this out. Here's a direct quote from the linked article:  Taxpayers and tax professionals need to carefully evaluate the impact that the sources of college funding can have on the net tax and financial position of the family unit. Blindly assuming that a student qualifies as a dependent on the parents’ tax return can result in noncompliance with tax law and can have other financial implications. With some preparation, tax professionals can plan for the dependency exemption issue and maximize the family’s net tax savings.  

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