Jul 27, 2008

Q & A: Graduating Student As Dependent Child

QUESTION: Our daughter is a full time student and will graduate at the end of July. She will be able to pick up a pool position in August that will pay her an hourly wage when she is needed to work. This is a part time position with no benefits. We have paid for all her support and schooling for the first seven months of the year. She will continue to live with us through the end of the year. Can we claim her as a dependent for 2008 and can we calm the cost for her college for the year?

ANSWER: Yours tax questions are common ones during this time of year. There are dependency tests to consider in answering your questions.
1) Age test -- If your daughter was a full-time student for at least 5 calendar months of the year and does not attain 24 years of age by the end of this year, this test is satisfied.
2) Principal Place of Abode test -- If she lives with you for at least one-half of the calendar year, this test is satisfied.
3) Support test -- You must provide at least 50% of your daughter's total financial support for the tax year. Be aware that the income from her job must be included in the support calculation. If your calculation shows that you exceeded the 50% threshold, this test will also be satisfied.
So, given that your daughter satisfies the age test, you should be able to claim her as a dependent on this year's return. As for claiming the college education credit, this also should be available to you because your daughter will be a dependent on your return. You will most likely be eligible for the Lifetime Learning Credit. Go to the IRS web site at http://irs.gov for more information regarding the deduction of college education costs.

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