Cons of claiming your child as a dependent
If your child is a student, they probably have an income that's low enough for them to qualify for education credits, and it's very likely that those credits would amount to more savings for them than the Child Tax Credit would for you if you claimed them as a dependent.
When being claimed as a dependent on another tax return, your standard deduction is limited as well as the Earned Income Credit and the Education Credit.
No. You can't claim yourself as a dependent on taxes. Tax dependency is applicable to your qualifying dependent children and relatives only.
No, it is almost certainly more taxes saved (or tax credits earned) for your parents by claiming you as a dependent. You would be saving yourself a small amount while costing them a larger amount.
Claiming a dependent on your tax return can significantly reduce your tax bill or increase your refund. By taking advantage of credits like the Child Tax Credit, Earned Income Tax Credit, and deductions for child care and medical expenses, you could save thousands of dollars come tax time.
Once your child reaches the age of 18, they are considered an adult in the eyes of the IRS. However, if they are still a full-time student, you can continue to claim them as a dependent until they turn 24. Once they are no longer a full-time student, you must stop claiming 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.
A person cannot be claimed as a dependent unless that person is a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico, for some part of the year.
You can claim a child who works as a dependent if they still meet the requirements to be a qualifying child – including the age, relationship, residency, and support tests.
If a dependent is claimed as a qualifying child on another person's tax return, they generally do not need to file their own tax return, even if their income exceeds the filing thresholds.
However, each dependent that qualifies for the child tax credit will reduce your taxes by $2,000 and those that don't, can reduce your taxes by $500 each. For tax years prior to 2018, each child can you claim as a dependent provides an exemption that reduces your taxable income. The amount was $4,050 for 2017.
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.
Because the IRS processes the first return it receives, if another person claims your dependent first, the IRS will reject your return. The IRS won't tell you who claimed your dependent. Usually, you can identify the possibilities and ask (commonly, a former spouse).
People who have excessive dependency needs tend to have difficulty making everyday decisions without a great deal of advice and reassurance from others. They also avoid conflict because they fear losing the support and approval of important people in their lives.
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.
The more dependents you claim, the less income will be withheld (bigger paycheck), and by contrast, if you claim zero dependents, you will have the most tax taken out (smaller paycheck).
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.
A qualifying child can earn an unlimited amount of money and still be claimed as a dependent, so long as the child doesn't also provide more than half of their own support.
Here's the short answer: The Internal Revenue Service (IRS) will usually let you claim your child if they work or earn an income, no matter the dependent's income source, if certain requirements are met.
Each qualifying child that you claim as a dependent can help you qualify for up to $2,000 in tax credits. Child and Dependent Tax Credit. If you pay for care for a dependent while you work then those expenses can qualify you for a credit worth up to $3,000 for one dependent and $6,000 for two or more.
If you earned income, but your parents still qualify to claim you as a dependent, all you have to do is select the option for “I can be claimed on someone else's return”. Parents will qualify for educational credits that students potentially cannot get on their own.
Each dependent you claim can lead to a reduction in taxable income and potentially increase your tax refund. The exact amount saved varies depending on your tax bracket and the number of dependents claimed.
But did you know you can claim adult dependents as well? In general, an adult that you can claim as a dependent on your tax return is either a full-time student under the age of 24, a person who is permanently and totally disabled, or a parent that you support and/or care for.