You qualify for the full amount of the 2024 Child Tax Credit for each qualifying child if you meet all eligibility factors and your annual income is not more than $200,000 ($400,000 if filing a joint return).
You can claim a child as a dependent if he or she is your qualifying child. Generally, the child is the qualifying child of the custodial parent. The custodial parent is the parent with whom the child lived for the longer period of time during the year.
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.
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.
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.
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.
If a child lived with each parent the same amount of time during the year, the IRS allows the parent with the higher adjusted gross income (AGI) to claim the child.
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.
What you'll get. The most you can claim is $592.
It's important to note that if two or more taxpayers claim the same child, the IRS will use the “tiebreaker rule” to figure out who is eligible. You can always speak about your specific situation with your Jackson Hewitt Tax Pro when questions arise.
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.
After the IRS decides the issue, the IRS will charge (or, “assess”) any additional taxes, penalties, and interest on the person who incorrectly claimed the dependent. You can appeal the decision if you don't agree with the outcome, or you can take your case to U.S. Tax Court.
If the child lived with each parent for an equal number of nights, as is often the case of ex-spouses with joint custody, the custodial parent is the parent with the higher Adjusted Gross Income (AGI). Parents can also release their dependent claim to the other parent by completing Form 8332.
Gross income is the total of your unearned and earned income. If your gross income was $5,050 or more, you usually can't be claimed as a dependent unless you are a qualifying child. For details, see Dependents.
Can they claim an exemption for me as a dependent or qualifying child on their tax return? Share: It's possible, but once you're over age 24, you can no longer be claimed as a qualifying child. The only exception to this is if you're permanently and totally disabled.
To claim a child's income on a parent's tax return, the child needs to be considered a qualifying child dependent of the parent. Parents can use IRS Form 8814 to elect to report their child's income on their tax return instead of the child filing their own return.
You're eligible for the full credit amount if your modified adjusted gross income is $400,000 or below (married filing jointly) or $200,000 or below (all other filers). If your MAGI exceeds the limits, the credit is reduced by $50 for each $1,000 of income above the threshold until it phases out completely.
College students who are funding more than half of their living expenses could see a financial benefit from filing independently. To file as an independent, however, a college student must provide for more than half of their financial needs. This includes housing, tuition, food, clothing, transportation, and more.
The Custody Ratio Tiebreaker
Under these rules, the parent who has physical custody of the child for the greater part of the year – defined as more than 50% of the nights – typically has the right to claim the child as a dependent for tax purposes.
Not living with parents or not being claimed by them on tax forms does not make you an independent student for purposes of applying for federal student aid.
However, to claim a college student as a dependent on your taxes, the Internal Revenue Service has determined that the qualifying child or qualifying relative must: Be younger than the taxpayer (or spouse if MFJ) and: Be under age 19, Under age 24 and a full-time student for at least five months of the year.
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.