Once a child graduates from high school and goes off into the world, whether it’s to college or a new job, being able to claim that adult child as a dependent isn’t so clear cut. They may think of themselves as fully independent, but when it comes to taxes, the answer is, yes, you may be able to claim your adult child as a dependent.
For starters, any child under the age of 19 by the end of the year can be claimed as a dependent on a parent’s tax return.
College Students as Dependents
If your adult child is over the age of 19, the most common way for a parent to claim them as a dependent is if they are under the age of 24 by the end of the year and a full-time student. It doesn’t matter if that child lives with you or on campus as long as they were enrolled in school for at least five months.
While your college student no longer qualifies for the Child Tax Credit, they do qualify for the $500 Credit for Other Dependents.
Additional Benefits of Claiming a College Student
There are additional education credits that you can claim if your adult child is in college and you’re claiming them as a dependent. These credits can only be used for qualifying education expenses, which include course-related books, supplies, and equipment.
- The American Opportunity Credit is a maximum credit of $2,500per student. The student may not be eligible for the entire credit based on the amount of qualifying expenses and/or if your income is over the limit for the credit. Also, it can only be claimed in the first four years of post-secondary education.
- The Lifetime Learning Credit is a maximum credit of $2,000 per return. It also has an income limit, but no limit on the number of years it can be used.
**It is important to keep in mind that you cannot claim both of these credits, so you will want to take the one that gives you the largest credit.
Scholarships, Fellowships, and Grants
In addition to the above credits, if your college student has received any scholarships, fellowships, or grants, and that money was used to cover tuition and/or books, supplies, or equipment (but not room and board or travel), it can be excluded from the student’s taxable income, which could lower your tax liability.
But What If My College Student Works?
If your college student has earned income but that income is less than $14,600, that income does not have to be reported. If they have earned income over $14,600, they will need to file their own tax return, however you can still claim them as a dependent as long as they indicate that on their tax return as well.
They may want to file their own tax return if they earned less than $14,600 if they had taxes withheld from their paychecks. By filing a return, they will get that money back as a refund.
**If your college student is filing their own taxes and is not being claimed as your dependent, then they are the ones who are eligible to take any education credits or deductions themselves. You will not be able to claim them or the credits on your own return.
Adult Children over 24
If your adult child is over the age of 24 and has returned home to live with you, you may be able to claim them as a dependent. To do so, that adult child must have gross income less than $5,050 and the taxpayer (you) must provide over half of the child’s support throughout the year. You may be eligible for the Credit for Other Dependents of $500 in this scenario.
Adult Children Who Are Permanently Disabled
The other case in which you can claim an adult child as a dependent is if they are permanently disabled and cannot earn income for themselves. In this case, you may be eligible for the Credit for Other Dependents ($500) as well as the Child and Dependent Care Credit. The Child and Dependent Care Credit can be used for up to $3,000 of expenses that are paid to a person or institution who cares for that child while the taxpayer is at work or looking for work. You must have earned income to claim this credit.
Health Insurance and the Adult Child
If you, the parent, are self-employed and you paid for health insurance for your adult child, you may be able to deduct the premiums you paid to cover that child up to the age of 27, even if you do not claim that twenty-something as a dependent.
Also, regardless of dependency status, an adult child can stay on a parent’s health insurance until their 26th birthday.
It’s true, your child may finally be an adult, but in certain circumstances, you can still claim them as a dependent. Not sure if you can claim your adult child as a dependent? Moore & Paquette Tax Group can answer your questions.
**Please note that tax laws change often, and you should always check with a tax preparer for the most up-to-date information.