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  1. #1
    Join Date
    Jan 2019
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    Default Daughter Graduated College, Workin/Moving Out of State. 2020 Dependent Stimulus

    I know it's early but.. For 2020 tax year, Still a dependent? What education credits/deductions can be claimed, and by who. Stimulus eligibility?
    Daughter, 21 just graduated college in May, got job out of state in June, still living at home with us here in NY and working remotely until Mid August. She will then be moving out of state.
    She has always been a dependent on or taxes including 2019. I took the
    I've been taking the the American Opportunity Tax Credit for the 4 years, 2016-2019. She does have around $20k in fed student loans in her name so I'm not sure about how deducting interest will work.

    I'm trying to figure how the tax situation will end up or if there are options to maximize overall refunds by planning ahead.
    I know it's early but.. For 2020 tax year, Is she still a dependent on my taxes for 2020?
    If not, any idea if will then be eligible for the first stimulus check, and /or the possible upcoming one?

    Also, are there going to be any type of education credita/deductions that either her or us will still be eligible for in 2020?

  2. #2
    Join Date
    Oct 2016
    Posts
    4,301

    Default Re: Daughter Graduated College, Workin/Moving Out of State. 2020 Dependent Stimulus

    The IRS has a website that asks several questions to answer the dependant question here. https://www.irs.gov/help/ita/whom-ma...as-a-dependent

    They don't currently have it set up for 2020 but, to my knowledge there haven't been any major changes for 2020 so use 2019.

    https://www.irs.gov/credits-deductio...ded%20to%20you.

    Will provide info on the education credits.

    The credits go to the person that paid the tuition.

  3. #3
    Join Date
    Oct 2006
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    16,474

    Default Re: Daughter Graduated College, Workin/Moving Out of State. 2020 Dependent Stimulus

    Quote Quoting PayrolGuy
    View Post
    The IRS has a website that asks several questions to answer the dependant question here. https://www.irs.gov/help/ita/whom-ma...as-a-dependent

    They don't currently have it set up for 2020 but, to my knowledge there haven't been any major changes for 2020 so use 2019.

    https://www.irs.gov/credits-deductio...ded%20to%20you.

    Will provide info on the education credits.

    The credits go to the person that paid the tuition
    .
    The bolded is incorrect. The credits go with the dependency. If AOC has already been used 4 times, then the Lifetime Learning Credit may be available, but the odds are that the parent's income will exceed the income levels for that.

    Much depends on the income level of the adult child and the income level of the parents. If an adult makes enough money to provide more than 50% of their own support, then they are no longer a dependent even if they would otherwise qualify to be one. Sometimes the year that they graduate from college they end up making a decent amount of money.

    There is also the stimulus to take into consideration. They would not have received a stimulus for her since she is over 17, but she would get the stimulus for herself on her 2020 return if she was not on someone else's return as a dependent.

  4. #4
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    Oct 2016
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    4,301

    Default Re: Daughter Graduated College, Workin/Moving Out of State. 2020 Dependent Stimulus

    Quote Quoting llworking
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    The bolded is incorrect. The credits go with the dependency. If AOC has already been used 4 times, then the Lifetime Learning Credit may be available, but the odds are that the parent's income will exceed the income levels for that.
    A person doesn't get to take the credits if they didn't pay the tuition though.

  5. #5
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    Oct 2006
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    16,474

    Default Re: Daughter Graduated College, Workin/Moving Out of State. 2020 Dependent Stimulus

    Quote Quoting PayrolGuy
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    A person doesn't get to take the credits if they didn't pay the tuition though.
    This graduated student has student loans outstanding. In the end, the student is going to be paying the tuition. However, you are still incorrect on that particular issue. You are basically saying that a parent could not take an education credit for their child if the tuition is paid for with student loans.

  6. #6
    Join Date
    Oct 2014
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    8,238

    Default Re: Daughter Graduated College, Workin/Moving Out of State. 2020 Dependent Stimulus

    Quote Quoting PayrolGuy
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    A person doesn't get to take the credits if they didn't pay the tuition though.
    Not correct. For example, for the American Opportunity Credit (AOC), IRS publication 970 states: "Qualified education expenses paid by a dependent you claim on your tax return, or by a third party for that dependent, are considered paid by you."

  7. #7
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    Oct 2016
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    Default Re: Daughter Graduated College, Workin/Moving Out of State. 2020 Dependent Stimulus

    Quote Quoting Taxing Matters
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    Not correct. For example, for the American Opportunity Credit (AOC), IRS publication 970 states: "Qualified education expenses paid by a dependent you claim on your tax return, or by a third party for that dependent, are considered paid by you."

    When I said that I sort of meant the former dependant can't take the AOC if they didn't pay it. I wasn't even thinking of the other side.

  8. #8
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    Oct 2006
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    16,474

    Default Re: Daughter Graduated College, Workin/Moving Out of State. 2020 Dependent Stimulus

    Quote Quoting PayrolGuy
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    When I said that I sort of meant the former dependant can't take the AOC if they didn't pay it. I wasn't even thinking of the other side.
    In this thread however, that is irrelevant as the OP specifically stated that the AOC had already been claimed for 4 years. Therefore, we are talking about either the Lifetime Learning Credit or the Tuition and Fees Deduction, neither of which is limited in that fashion.

  9. #9
    Join Date
    Jan 2019
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    22

    Default Re: Daughter Graduated College, Workin/Moving Out of State. 2020 Dependent Stimulus

    Quote Quoting llworking
    View Post
    The bolded is incorrect. The credits go with the dependency. If AOC has already been used 4 times, then the Lifetime Learning Credit may be available, but the odds are that the parent's income will exceed the income levels for that.

    Much depends on the income level of the adult child and the income level of the parents. If an adult makes enough money to provide more than 50% of their own support, then they are no longer a dependent even if they would otherwise qualify to be one. Sometimes the year that they graduate from college they end up making a decent amount of money.

    There is also the stimulus to take into consideration. They would not have received a stimulus for her since she is over 17, but she would get the stimulus for herself on her 2020 return if she was not on someone else's return as a dependent.
    Thanks for the info. Daughter is definitely now making enough and she will be covering more than 50% of her own support. Thankfully she got lucky during an unusual job market with insane unemployment. She was smart enough to look into Boston area and it payed off for her. Hopefully it works out.

    The 2020 tax year is certainly odd especially for those like my daughter, who didn't get the stimulus check because she was our dependent, but should be eligible to get that money after filing 2020 taxes. Essentially a win for her, that she is no longer considered a dependent of ours.

    One real quick question you might know the answer to. Those 4 years we used the AOC, which was nice... she was taking out the federal student loans in her name only, to help cover the remainder of tuition that we were unable to pay completely. About $20k total. She deferred payment until after graduation, which is now. Im assuming interest was accumulating during that time she was in school?
    If so, was this interest something I missed out on claiming? I guess I just want to make sure I didn't miss out on a bigger refund those past years.

  10. #10
    Join Date
    Oct 2006
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    16,474

    Default Re: Daughter Graduated College, Workin/Moving Out of State. 2020 Dependent Stimulus

    Quote Quoting tiktek
    View Post
    Thanks for the info. Daughter is definitely now making enough and she will be covering more than 50% of her own support. Thankfully she got lucky during an unusual job market with insane unemployment. She was smart enough to look into Boston area and it payed off for her. Hopefully it works out.

    The 2020 tax year is certainly odd especially for those like my daughter, who didn't get the stimulus check because she was our dependent, but should be eligible to get that money after filing 2020 taxes. Essentially a win for her, that she is no longer considered a dependent of ours.

    One real quick question you might know the answer to. Those 4 years we used the AOC, which was nice... she was taking out the federal student loans in her name only, to help cover the remainder of tuition that we were unable to pay completely. About $20k total. She deferred payment until after graduation, which is now. Im assuming interest was accumulating during that time she was in school?
    If so, was this interest something I missed out on claiming? I guess I just want to make sure I didn't miss out on a bigger refund those past years.
    No, you only get to deduct interest that someone actually paid. No one was paying on the loans, so no interest was paid.

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