Your Parents Want To Claim You on Their Taxes — Should You Let Them?
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Claiming dependents is one of the best ways to reduce taxable income. Parents can even claim their adult children if they meet IRS requirements.
If your parents want to claim you on their taxes this year, should you let them? Here’s what you should know, according to experts.
You Must Meet the Qualifying Child Test
Parents can only claim their child if the child meets the IRS qualifying child test.
“You can claim a dependent under the age of 19 or up to the age of 24 if [they] are a full-time student and meet the dependency requirements,” explained John Adams, CPA and fractional CFO expert at Bridgewater Tax and Financial Consulting.
There’s no age limit if the child is “permanently and totally disabled,” according to IRS rules. A qualifying relative may also be claimed if they meet dependency tests.
When It Makes Sense
“The best outcome for parents is to claim their child when their child has little or no income,” Adams said. “Oftentimes, parents benefit from child tax credits for those under 17, earned income tax credits, and education credits like the American Opportunity credit.”
Rob Burnette, financial advisor and registered tax preparer at Outlook Financial Center stated that the most common scenario where this question comes into play is when the child has a part-time job while in school.
“If the child has income, he or she may have to file a tax return if he or she earns gross unearned income exceeding $1,300 or gross earned income exceeding $14,600,” Burnette explained.
Although the child may not meet the requirements to file a tax return, Burnette pointed out that he or she should file anyway to get a refund of taxes withheld.
“The important point in most cases is for the child to not claim their own dependency on their tax return so that the parents can still claim them on their tax return,” he said.
When It Doesn’t Make Sense
It doesn’t make sense for a parent to claim their child if the child makes a lot of money.
“For example, if the dependent provides more than half of their support themselves, then they do not qualify as dependents. Support means that they pay for items such as rent, food, tuition, etcetera,” Adams explained. “When filing independently, children may be eligible for their own tax credits, such as the Lifetime Learning credit, when their income is higher.”
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