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Margaret CPA in OH

'Child' tax credit

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Clients have children, 11 and 21.  Older one is in college so still dependent but parents get no benefit by claiming him on their return, right?  Mom is physician so EIC is not applicable.  Older one earned $4800.  It seems he could file for refund of tax withheld but does he file as single as there is no benefit to parents to claim?  With no exemption at stake, what am I missing as to whether he would file as single and claim himself as opposed to still being a dependent (which he actually is) on his parent's return?  I'm sure there is something obvious but this is just weird to me and my history.

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If Older is still a full time student for any part of 5 months of the year, and not self-supporting, Parents still claim him. He can file a return to get his withholding back without claiming his own exemption. 

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Don't forget the 500 dependent credit new this year.  I would keep him on his parents return and file him as a dependent on someone else return just to get him a refund if he has one coming.

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I understand that parents can 'claim' him, he meets the requirements, but for what purpose?  Without the exemption, the parents get no additional tax benefit now, right?  I'm just trying to get through my increasingly thick head how claiming children 17 and over are tax beneficial unless there is EIC or education credits for which these folks don't qualify - way too much income.

I suppose it doesn't really matter whether 'kid' claims himself or not.  I do know he can file for tax refund as he is under the limit required for filing.  Just trying to truly grasp the rules - it will be painful enough to get the required docs for 11 yr old CTC. 

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21 minutes ago, Margaret CPA in OH said:

Okay, then, NECPA!  I just kept going round and round with this.  Just dizzy by now.  The parents may not be at the phase out level just yet, so all is good.  Thanks again!

And maybe Ed credits for parents?

 

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See above - parents make too much money to qualify for ed credits.  That's why I was so confused as to the benefit of even claiming him as my initial reading was that, being over 17, he didn't qualify for 'child' tax credit and the $500 was for 'other' dependents.

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Keep in mind that we have two kinds of dependents, those who qualify for a credit of $2,000 and the others that DON'T.  You just need to keep in mind that income limitations.

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If the child is a full-time student under the age of 24 and does not provide more than half of his support, he cannot claim himself, only the parents can.  What you might be thinking of is a way to use education credits if the parents are over income.  If they do not claim the child, he still can't claim himself but he can take the AOC (not the refundable part).  Of course, then the parents miss out on the $500, and all he gets is to reduce his tax liability to zero.  In this case, his tax liability is already zero (standard deduction is $4800 + 350, unless he has investment income), so there is no benefit to nobody claiming him.

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Remember that the income levels for phaseout of the child tax credit and other dependent credit have been increased significantly, so more taxpayers can benefit from them.  On a joint return, the phaseout begins at $400,000 of AGI.  For single, head of household, and married separate return, the phaseout begins at $200,000.

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Thanks, all.  I think I've got this now.  Parents mfj claim both, 11 yr old gets them $2k child credit, 21 yr old gets them $500 credit.  No ed credit as they make in excess of $200k.  21 yr old is dependent, wouldn't get credit any way, doesn't even need to file. I now understand the 'other dependents' credit which can be a child 17 or over who is otherwise a dependent.

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