If your parents claim you as a dependent, you still file your own individual tax return and pay tax on your own separate income. You are NOT necessarily taxed at the same rate as your parents. In fact many young people who are truly dependents still end up not owing any tax.
The effect it will have on you is that you will owe slightly more in taxes, so you will get less of a tax refund (or may owe the IRS money if your employer wasn't withholding enough taxes). But only one person can claim to be supporting you - either your parents claim you as a dependent or you claim yourself.
Claiming a dependent on your tax return can significantly reduce your tax bill or increase your refund.
Good Reasons
If your income disqualifies you from claiming these credits, your child's income probably doesn't disqualify him or her. Therefore, your child may be able to report payment of education expenses for tax purposes and then claim one of the credits – but only if you don't claim him or her as a dependent.
If you are financially responsible for your parent and cover more than 50% of their expenses, you may be able to claim them as a dependent. Claiming a parent as a dependent can yield valuable tax breaks, including a lower taxable income and possible deductions or credits.
Here's more information to help taxpayers determine whether they're eligible to claim the Credit for Other Dependents on their 2022 tax return. The maximum credit amount is $500 for each dependent who meets certain conditions.
It's up to you and your spouse. You might decide that the parent who gets the biggest tax benefit should claim the child. If you can't agree, however, the dependency claim goes to your spouse because your son lived with her for more of the year than he lived with you.
Head of Household with Dependents
You'll most likely get a tax refund if you claim no allowances or 1 allowance. If you want to get close to withholding your exact tax obligation, claim 2 allowances for yourself and an allowance for however many dependents you have (so claim 3 allowances if you have one dependent).
You can claim the standard deduction unless someone else claims you as a dependent on their tax return.
If you're a dependent on someone else's return
You can be claimed as a dependent and still need to file your own tax return. Your filing requirement depends on your income, marital status and other criteria. Find details on filing requirements for dependents.
If you owe money to a federal or state agency, the federal government may use part or all of your federal tax refund to repay the debt. This is called a tax refund offset. If your tax refund is lower than you calculated, it may be due to a tax refund offset for an unpaid debt such as child support.
Cons of Claiming a College Student as a Dependent
If your child has earned income and you claim them as a dependent, they lose the opportunity to claim their own personal exemption (when applicable in future years) and certain tax credits that could be more advantageous for them.
The child must have lived with you for more than half of the year.2 3. The person's gross income for the year must be less than $4,300.3 Gross income means all income the person received in the form of money, goods, property and services, that isn't exempt from tax.
If the person who claimed you did so in error, they will need to file an amended return to remove you as a dependent. If the person who claimed you did so fraudulently, you may also need to contact the IRS to report identity theft.
Considerations When Filing as a Dependent or Independent Student. If your parents meet eligibility criteria to claim you as financially dependent for tax purposes, it is usually more beneficial for them to do so rather than you claiming a deduction for yourself.
However, even if two or more persons have the same qualifying child, only one person can claim the child as a qualifying child for all these benefits. Special rules apply for parents who are divorced, separated, or who are living apart.
To meet the qualifying child test, your child must be younger than you or your spouse if filing jointly and either younger than 19 years old or be a "student" younger than 24 years old as of the end of the calendar year.
In addition to lowering taxable income, claiming dependents may also enable you or your clients to be eligible for tax credits specifically designed to support families, such as the child tax credit and the earned income tax credit.
The Child Tax Credit is one pro of claiming your child as a dependent. It's a tax benefit that every American taxpayer can claim for every qualifying dependent child they have. It was designed to help working families by directly decreasing the tax liability of the taxpayers in the family.
There is no age limit for how long you can claim adult children or other relatives as dependents, but they must meet other IRS requirements to continue to qualify. Additionally, once they are over 18 and no longer a student, they can only qualify as an "other dependent," not a qualifying child.
The Child Tax Credit is up to $2,000. The Credit for Other Dependents is worth up to $500. The IRS defines a dependent as a qualifying child (under age 19 or under 24 if a full-time student, or any age if permanently and totally disabled) or a qualifying relative.
The IRS sets these specific age limits: Under 19. If the child is under 19 years old at the end of the tax year, they typically qualify as your dependent. Under 24 and a full-time student.
Does claiming a parent as a dependent affect their SSI or SS benefits? You can claim a parent as a dependent without affecting their Social Security benefits or Supplemental Security Income (SSI). Just make sure your parent meets the qualifying relative tests.