When your parents can claim you as a dependent on their tax return, they get a hefty tax deduction. If you are a full-time student, it can help make you eligible as a dependent. However, you have to satisfy several other Internal Revenue Service rules to be qualified. When you are what the IRS calls a qualified child, it’s a big deal. Your parents may get a whole package of tax benefits worth thousands of dollars.
IRS Age Test
The IRS usually limits parents to claiming children who are less than 19 years old at the end of the year. Children who are permanently disabled are not subject to the age restriction and can be claimed at any age. You can still be claimed as a dependent if you are a full-time student until you turn 24 years old. You have to be enrolled in a post-secondary education program at least five months of the year.
Qualified Child Rules
You must live with your parents at least one-half of the year. Time spent away at school isn't a problem, though, even if the school is clear across the country. You may not provide more than half of your own support, and you can’t claim yourself as a dependent if you file a tax return. If you are married, you may not file a joint return except to claim a refund. Finally, you have to be a U.S. citizen, national or legal resident of the United States, Canada or Mexico.
The Dependent Exemption
Each child your parents claim entitles them to a dependent exemption, which is a tax deduction of $3,900 for the 2013 tax year (filed in 2014) and $3,950 for the 2014 tax year (filed in 2015). This means your parents get to subtract $3,950 off of their gross income when they do their taxes. The tax savings are equal to the highest tax rate they pay multiplied by the exemption amount. Suppose your parents pay a maximum tax rate of 28 percent. They save 28 percent of $3,950, or $1,106.
Tax Breaks for Education
When your parents claim you as a full-time student, they may qualify for several education tax benefits. They can deduct tuition and fees they pay for your schooling. Parents may also be eligible for education tax credits. The American Opportunity tax credit will cut up to $2,500 off your parents’ tax bill, depending on their income, and can be claimed for up to four years. In years they don’t claim the American Opportunity Credit, they may qualify for the Lifetime Learning Tax Credit, which can reduce their tax liability by up to $2,000.
- IRS: A “Qualifying Child”
- IRS: In 2014, Various Benefits Increase Due to Inflation Adjustments
- IRS: Tax Benefits for Education
- Journal of Accountancy: Is Your College Student Still a Dependent?
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Based in Atlanta, Georgia, W D Adkins has been writing professionally since 2008. He writes about business, personal finance and careers. Adkins holds master's degrees in history and sociology from Georgia State University. He became a member of the Society of Professional Journalists in 2009.