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My daughter is 21 years old and a full time student (junior in college). She lives at home and I pay all of her living and college expenses. She works part time to earn money to cover her casual expenses and speciality items. Her 2005 gross income was just over $14,000 (wages + interest earned). Is it better for me to claim her as a dependent or let her claim herself on her own return.

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Cypress, California

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Reading the publication 501

Submitted: 1328 days and 9 hours ago.

Category: Tax

Value: $8

Status: CLOSED

Posted by LEV 1328 days and 9 hours ago.

Info Request

This will depends on your income. How much income do you had in 2005? Do you have other kids or dependents?

1328 days and 9 hours ago.

Reply

Reply to Lev's Post: Gross income is approx. $144,000, taxable income of approx. 105,000. My wife and I file a joint return, my wife is not employed. Only one kid at home other is own his own. Last year I claimed my daughter as a dependent since she only had unearned income from interest.

Posted by LEV 1328 days and 9 hours ago.

Answer

Because it is clear that you are in higher tax bracket than your daughter it more beneficial for you to claim her as a dependent.

If you claim her as dependent you will have $3200 extra deduction that with your 25% taxes will save $800

Your daughter will lost $3200 deduction and will pay $981 instead of $578 - that ~$400 extra taxes

The saving is about $400.

There might be other things that should be taken in consideration, such as if she is your dependent and you takes a loan to pay for college - you will be eligible to deduct the educational expenses and interest whet the time comes to pay it back.

1326 days and 17 hours ago.

Reply

Relist:
Your answer didn't address education expense deduction. As I understand it If I claim my daughter as a dependent I receive the 3200 deduction and can clain the allowable expense for paying her tuition or if she claims herself she gets the 3200 deduction and can claim the maximum education expense allowed for her tuition. is that correct.

Accepted Answer

You daugher can not claim her educational expenses because you CAN claim her as a dependent. It doesn't matter for this situation if you actually claim her or not. The only way to get tax benefits for educational expenses is to claim them on your return.

please see reference IRS pub 17 pages 129 and 225 - http://www.irs.gov/pub/irs-pdf/p17.pdf

Please let me know if more details are needed

Expert:	LEV
Pos. Feedback:	99.3 %
Accepts:	6843
Answered:	3/22/2006

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Info Request

This will depends on your income. How much income do you had in 2005? Do you have other kids or dependents?

Reply

Reply to Lev's Post: Gross income is approx. $144,000, taxable income of approx. 105,000. My wife and I file a joint return, my wife is not employed. Only one kid at home other is own his own. Last year I claimed my daughter as a dependent since she only had unearned income from interest.

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