What are the implications of putting my kid as a dependent on my tax return?

[XYZ 2154]

So in the 1040 form if I put my 18 year old kid as a dependent, I get a $500 child tax credit. What other implications are there? Am I supposed to claim him as a dependent? Thanks in advance.

[deadshank 24654]

Is dependent on you and your income to get by?

[Iceman 2978]

in the year they turn 18, the $500 tax credit no longer applies.  yes you can still claim them as a dependent, as long as they fit the parameters.

[XYZ 2154]

So what is the point of claiming somebody as a dependent if you can’t get a tax credit?

[Iceman 2978]

There are deductions that are still counted versus your taxable income.

[Brew 3049]

7 hours ago, Iceman said:

in the year they turn 18, the $500 tax credit no longer applies.  yes you can still claim them as a dependent, as long as they fit the parameters.

 Not true, children 17-18 qualify for the $500 and children in college 19-24 qualify for the credit. 

If they qualify as your dependent and they aren’t working you should claim them. Sales tax exemption, certain credits (EIC, education, etc.), and a few other things are dictated by dependents. If they are still in high school and depending on where your income level is, it probably only makes the $500 difference though plus the additional $500 on the stimulus checks if your income qualifies. 

[Iceman 2978]

the year they turn 18, they are no longer eligible for the tax credit.

From the IRS site:

Child Tax Credit

Beginning with Tax Year 2018, you may able to claim the Child Tax Credit if you have a qualifying child under the age of 17 and meet other qualifications. The maximum amount per qualifying child is $2,000. Up to $1,400 of the credit can be refundable for each qualifying child as the Additional Child Tax Credit. A refundable tax credit may give you a refund even if you don’t owe any tax.

Edited May 17, 2020 by Iceman

[Brew 3049]

9 minutes ago, Iceman said:

the year they turn 18, they are no longer eligible for the tax credit.

From the IRS site:

Child Tax Credit

Beginning with Tax Year 2018, you may able to claim the Child Tax Credit if you have a qualifying child under the age of 17 and meet other qualifications. The maximum amount per qualifying child is $2,000. Up to $1,400 of the credit can be refundable for each qualifying child as the Additional Child Tax Credit. A refundable tax credit may give you a refund even if you don’t owe any tax.

The CTC is the $2,000 credit. You actually lose it at 17, not 18 if you read what you posted. The Family Tax Credit/Credit for Other Dependents is the $500 tax credit that kicks in at 17 for children in school or not working and other qualified dependents.

[Iceman 2978]

Wrong. Eligibility ends in the year they turn 18. I’ve lived it... and it’s right there in black and white. 
 

There might be other credits for which the parent qualifies such as education credits, but not this one, as the question was asked.  

Edited May 17, 2020 by Iceman

[Brew 3049]

26 minutes ago, Iceman said:

Wrong. Eligibility ends in the year they turn 18. I’ve lived it... and it’s right there in black and white. 
 

There might be other credits for which the parent qualifies such as education credits, but not this one, as the question was asked.  

You do realize tax law changes, correct? Also, what do you think under 17 means in what you quoted above? It doesn’t say under 18. Once your child turns 17, they are eligible for the $500 ODC not the CTC. 

Here is the actual link you need to be looking at https://www.irs.gov/pub/irs-pdf/p972.pdf. Go straight to example 1 if you still don’t believe that it is 17.

Also, this is further proof why you don’t take tax advice from people on the internet. I’ll post my credentials, managing partner of a regional accounting firm and the lead tax partner in the firm, go ahead and post yours. 

Edited May 17, 2020 by Brew
Updated to 2019 972 link

[bernorange 8385]

8 hours ago, XYZ said:

So what is the point of claiming somebody as a dependent if you can’t get a tax credit?

Establishing dominance.

[Surly Bevo 25734]

Make enough money that you don't qualify for any of those credits and your problem is solved.

[TwiceHorn 32076]

1 hour ago, Brew said:

You do realize tax law changes, correct? Also, what do you think under 17 means in what you quoted above? It doesn’t say under 18. Once your child turns 17, they are eligible for the $500 ODC not the CTC. 

Here is the actual link you need to be looking at https://www.irs.gov/pub/irs-pdf/p972.pdf. Go straight to example 1 if you still don’t believe that it is 17.

Also, this is further proof why you don’t take tax advice from people on the internet. I’ll post my credentials, managing partner of a regional accounting firm and the lead tax partner in the firm, go ahead and post yours. 

Don't trifle with Brew.  He's the tax expert round here.

[bernorange 8385]

I was just reading through a summary of the House's Heroes Act and saw this:

Quote

SUBTITLE D – CHILD TAX CREDIT
Sec. 20131. Child tax credit improvements for 2020.
Makes the child tax credit (“CTC”) fully refundable for 2020 and increases the amount to $3,000 per child ($3,600 for a child under age 6). The provision also makes 17-year-olds qualifying children.  The provision requires the Secretary to make best efforts to provide the enhanced credit in the form of an advanced payment.

https://appropriations.house.gov/sites/democrats.appropriations.house.gov/files/documents/Heroes Act Summary.pdf

[RexWilson 1502]

Brew laying it down like Bullet Tooth Tony

[williemackgarza 1826]

Well, that escalated quickly

[NeverMarryAStripper 22294]

Also, this is further proof why you don’t take tax advice from people on the internet.

So you’re saying he shouldn’t listen to you

[Brew 3049]

18 minutes ago, NeverMarryAStripper said:

So you’re saying he shouldn’t listen to you

You’re getting what you pay for so take that for what it’s worth. IRS source is attached for your reading pleasure though which I usually try and attach with my responses.

Every tax thread that pops up on here ends up with incorrect advice being given. Most of the questions are too nuanced and circumstance specific for general Q&A. Case in point, this is a perfectly simple question with a perfectly simple answer you would think. Other than the fact that there are a bunch of other circumstances like did the kid live with you more than half the year, are you providing support, are you married to the kid’s mother and have legal rights to claim him, are you over the income limits to where it phases out even if you qualify, I could probably come up with 10 more questions to ask if needed. My credentials are posted here and in other threads on tax matters and I’ve helped several offline with more specific questions. I’ll PM you my firm name if you’re really interested and I’m real easy to find on it. My posting history doesn’t have anything in it that concerns me, so my name being tied to it doesn’t bother me. People getting shit advice and losing out on deductions they are entitled to does concern me.

Edited May 17, 2020 by Brew

[luke duke 6449]

You do realize tax law changes, correct? Also, what do you think under 17 means in what you quoted above? It doesn’t say under 18. Once your child turns 17, they are eligible for the $500 ODC not the CTC. 
Here is the actual link you need to be looking at https://www.irs.gov/pub/irs-pdf/p972.pdf. Go straight to example 1 if you still don’t believe that it is 17.
Also, this is further proof why you don’t take tax advice from people on the internet. I’ll post my credentials, managing partner of a regional accounting firm and the lead tax partner in the firm, go ahead and post yours. 

Brew whipped out his 10 pounder

[elfenix 34749]

classic slorch

[Iceman 2978]

9 hours ago, Brew said:

You do realize tax law changes, correct? Also, what do you think under 17 means in what you quoted above? It doesn’t say under 18. Once your child turns 17, they are eligible for the $500 ODC not the CTC. 

 

Thank you for agreeing with me.

[Iceman 2978]

34 minutes ago, elfenix said:

classic slorch

yep.  The answer was correct.  people argued and hemhawed about it, but the 18 year old is not eligible for that credit.

[Brew 3049]

2 hours ago, Iceman said:

yep.  The answer was correct.  people argued and hemhawed about it, but the 18 year old is not eligible for that credit.

There is nothing wrong with just admitting every post you have made in this thread is wrong. As far as semantics of the two credits, most people still call the $500 ODC a CTC and it was crystal clear what he was asking.

[Js1 87178]

17 hours ago, elfenix said:

classic slorch

Love watching him argue when he’s wrong. 

[BearSchlong 8240]

Don't forget other situations - in order to establish in-state residency for tuition purposes, my daughter could not be listed as a dependent on someone else's tax return.

On the eve of filing for state residency, we discovered that my ex wife had claimed her as a dependent.  She had to file an amended tax return and send us a copy for proof.  I'm sure that cost her a few thousand $$.

[blacklab 12064]

The other thing to think about is scholarships/student loans/grants/financial aid. Kids have to be off of parents returns for 2 years before many programs will not consider the parents income when determining the person's available resources. If they are about to go to college it may be better in long run to leave off.