Q:

Subject: daughter's taxes

 

Kerry,  Our daughter is a student at NAC in Harrison.  She has lived in Harrison since July with my mom and has worked part time at Home Depot since July.  So this year she will have her own W2 form.  I am guessing that she will need to file her own taxes?  I just want to be sure before I tell her to do it. 

A:

That's not necessarily the case.  It's a bit of a gray area. 

Since she was a student, you are still allowed to claim her as a dependent if you have been paying for more than half of her living expenses during the past year, even if she isn't in your home. If you've been giving her money for living costs while she was at your mom's, you can count that as part of your support contribution.

If your mom has been covering your daughter's living costs while she was there, and you covered them for the early part of 2006, it may be that neither of you paid more than 50% of her living costs for the entire year of 2006; which would mean that your daughter would have to claim her own personal exemption.

The real test that make most tax sense is based on how much she earned during the year.  If she made more than $5,150, she will save on taxes by claiming herself.  If she made less than that, there is no need for her to claim herself and it would be better tax-wise for you to claim her, as long as you met the more than 50% support test.

I hope this isn't too confusing.

Kerry

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 2/11/2007 08:12:00 PM Send this post: