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IRS Definition of Dependent
Claiming a college student on your taxes requires that they be your dependent.
The IRS defines who qualifies as a dependent in IRS Publication 501 Exemptions, Standard Deduction, and Filing Information. The definition of a tax dependent is actually fairly straightforward. It becomes complicated only because there are numerous exceptions and circumstances that are fully defined for legal purposes. However, the basic definition of dependent is a qualifying family member (usually a child) who must not have provided more than 50 percent of their own support for the year. In other words, you can claim qualified family members that you've provided more than 50 percent of the support for.
However, in order to qualify as a dependent under this definition, the child must be under the age of 19 at the end of the year (and younger than you or your spouse). While some freshmen may meet this requirement, many students will be too old to qualify. That is where one of the many exceptions comes into play.
A full-time student under the age of 24 at the end of the year may also be considered a dependent, if more than 50 percent of that child's support was provided by the taxpayer claiming the student as a dependent.
To qualify as a "full-time" student, the child must be enrolled for the number of classes or credit hours that the institution considers to be full-time for five calendar months during the year. In other words, if the student is attending the XYZ University and XYZU considers 14 credit hours to be full time, the student must be enrolled in 14 credit hours during five months between January and December of the tax year. The five months do not have to be sequential. This rule generally means that the student needs to be enrolled full-time for more than one semester or more than two quarters to be considered a full-time student. Unless the college counts them differently, it does not matter if classes are taken pass or fail versus standard grading.
Students over the age of 19 who are not enrolled full-time may not be claimed as a dependent regardless of how much support was provided.
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There Can Be Only One
In order to claim a student as a dependent for tax purposes, the student must not only meet the general definition above, but must also pass certain tests to qualify as a dependent.
The most important test is that the student may not be claimed as a deduction on any other taxpayer's return, including their own. In other words, students with income may not take their own personal deduction if they are going to be claimed as a dependent on their parent's tax return. Likewise, a student with parents who are separated or otherwise filing independently may be claimed on only one parent's tax returns, regardless of how much support any one parent provides.
As part of some divorce agreements, one parent is given the right to claim the student on their income taxes. Since all tax credits and deductions are based on the status of the student as the taxpayer's dependent, there is no way to split up deductions or credits between tax returns. That is, that a student may not be claimed as a dependent for purposes of the Hope Credit on one parent's tax returns and on another parent's return for purposes of deducting student loan interest.
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Resident or Non-Resident Student
Keep in mind that for many colleges and universities, qualifying as an in-state student requires that the whoever claims the college student on their taxes be a resident of the state. In other words, if a student wants to qualify for in-state tuition based on the fact that they themselves are residents of the state, they cannot be claimed as a dependent on their out-of-state parent's tax returns.
In the end, students and parents must determine both whether or not the student qualifies to be deducted on the parent's tax returns, and whether or not doing so is in their best interest.
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