Dependent question

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pepka
pepka Member Newcomer

My daughter was 22 last year, a full time grad student and moved back in with me in May 2023. She works full time and goes to school full time. She doesn't pay rent or any bills or pays for food. However, she made more money than I did last year. I supported her by using life insurance from her father who passed away 8 years ago. Can I still claim her and prove if ever audited that I withdrew quite a bit of money from life insurance to support her? Thank you

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  • KeriC
    KeriC FreeTaxUSA Agent
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    Let's take a look at each of the requirements for claiming a dependent and having the dependent be a qualifying child.

    See https://www.irs.gov/credits-deductions/individuals/dependents

    These rules generally apply to all dependents:

    • A dependent must be a U.S. citizen, resident alien or national or a resident of Canada or Mexico
    • A person can't be claimed as a dependent on more than one tax return, with rare exceptions
    • A dependent can't claim a dependent on their own tax return
    • You can't claim your spouse as a dependent if you file jointly
    • A dependent must be a qualifying child or qualifying relative

    To qualify as a dependent, a child must also pass these tests:

    • Relationship: Be your son, daughter, stepchild, eligible foster child, brother, sister, half-sister or -brother, stepbrother, stepsister, adopted child or the child of one of these
    • Age: Be under age 19 or under 24 if a full-time student, or any age if permanently and totally disabled
    • Residency: Live with you for more than half the year, with some exceptions
    • Support: Get more than half their financial support from you
    • Joint return: Not file as married filing jointly unless only to claim a refund of taxes paid or withheld

    Going by the general rule, your daughter likely meets the first 4 bullet points for "all dependents". For the qualifying child test, she should also qualify as your dependent as long as she received more than half of her support from you. It shouldn't matter the source of your support; whether from income you made or from other sources that belonged to you. If you determine that you did provide more than half of her financial support and based on the information you provided, you likely do qualify to claim her as a dependent. *

    I recommend retaining records of any support you provided to her if the IRS asks for it. Also, your daughter will want to make sure that she indicates she is being claimed as a dependent on another tax return when she files.

    * Because your daughter did work full-time, it may be beneficial for each of you to fill out your tax returns and run a comparison to see what provides the most beneficial outcome between the two of you; you claiming her as a dependent or having her claim herself. Depending on her income level and potential education credits, it may be more beneficial for her to claim herself.