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Question

My daughter just started her first year of college and will turn 18 January 1, 2010. Because she is a full-time student under 24 (supported by us) we planned on claiming her as a dependent on our 2009, 2010, etc. taxes. However, she is wanting to claim herself on her tax filing because, according to her, it will give her a lower rate on her student loan. Our annual adjusted gross income is ~$100,000, and her annual income (part-time job) is approximately several thousand. Should I let her claim herself (and lose my deduction), or should we continue to claim her until she is 24?

Submitted: 59 days and 6 hours ago.
Category: Tax
Value: $15
Status: CLOSED
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Country/State/Province of question: US, Louisiana, Baton Rouge

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Posted by Anne 59 days and 6 hours ago.

Answer

Hi XXXXXXXX

Thank you for using justanswer. Whether or not your daughter can claim financial aid on her own is no longer a matter of choice, but is now goverened by the rules for FASA. Those are:

  • Be at least 24 years of age by December 31st of the financial aid award year
  • Be enrolled in a Masters, PhD or some other post-baccalaureate degree program for the academic year of the financial aid award
  • Be married on the day you apply for financial aid (being separated still counts as being married)
  • You have children who receive more than half of their support from you
  • You have dependents other than children who live with you and receive more than half of their support from you (for example, a grandparent)
  • Your parents are deceased
  • You were a ward of the court until age 18
  • You are serving active duty in the armed forces (other than training)
  • You are a veteran of the U.S. armed forces
The above was quoted from :

Independent Status for Financial Aid - Do You Have Dependent or ...

If the link doesn't work, you may copy this address and paste it in your browser:

collegeapps.about.com/od/.../f/independent-status-financial-aid.htm

I know this is not the answer your daughter was hoping for, but I hope this gives some clarification.




59 days and 6 hours ago.

Reply

My question wasn't so much whether she can deduct her financial aid but if she should claim herself on her taxes, or if we should continue to claim her as a dependent.

Accepted Answer

You will gain the biggest tax advantage by claiming your daughter. Personal exemptions for 2009 will be $3650 per person/dependent. This translates into $913 of tax savings since it appears you will be in the 25% tax rate category.

Your daughter would only gain $365 at the lowest tax rate if she even had enough income to have a tax liability (income > $5700)

I hope this helps.

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Expert: Anne
Pos. Feedback: 100.0 %
Accepts: 
Answered: 9/25/2009

Master Tax Preparer

Enrolled Agent with 20 Years Experience specializing Individual and Small Businesses

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