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Can You Claim Your College Child as a Tax Dependent?

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Mar. 9 2022, Published 3:50 a.m. ET

You may already know that claiming dependents can help reduce your tax bill. Should you claim your college student children as tax dependents, though?

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Keeping up to date on filing tax returns correctly is important—breaking IRS rules can be severe, and the rules may change from time to time. Additionally, knowing how to reduce your tax liability can save you money.

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How do I know if my college student is a tax dependent?

The IRS has set guidelines to help parents determine if their child or relative qualifies as a dependent for tax purposes. The rules are mostly based on age, relationship, and residency. To claim a student as a dependent, they must be under 24 years old. However, the age restriction doesn’t apply for children who are permanently disabled.

You should also know that you can claim your child, stepchild, brother, stepbrother, or grandchild as a tax dependent, as long as you've provided more than 50 percent of their financial support. Support includes paying for the student’s food, clothing, housing, transport, education, and healthcare.

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Additionally, the student must have stayed with you for at least half of the year to be claimed as a dependent, and they must be a resident of the U.S., Canada, or Mexico. An adopted child may be exempt from the residency requirements.

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Should I claim my college student as a tax dependent?

Claiming a dependent can make you eligible for a number of tax-savings opportunities through deductions and credits. Deductions are expenses you can subtract from your income, resulting in your tax owed being calculated off a smaller amount. With credits, you get to subtract an amount directly from your tax bill.

Parents with a child in college and who make less than $80,000 per year can claim the American opportunity tax credit, which is up to $2,500 per student. This credit can be claimed for just the first four years of college. Also, a portion of the credit is refundable, meaning that if the credit completely writes off your tax bill, you may get back the balance as a tax return.

Meanwhile, the lifetime learning credit can write off up to $2,000 of your tax bill per year. The credit is designed to offset various college expenses, such as tuition and books. If you claim a student as a tax dependent, you can also deduct up to $2,500 in interest paid on student loans.

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