I assumed it is. If not, I’ve been paying kiddie tax for nothing for the last few years.
@IxnayBob - Generally tuition and room and board count as support and are allocated to whoever paid them. However, scholarships and grants do not count as support for the purposes of determining who provides half or more of their support. Even if the student pays their own room and board, if they are full time and haven’t moved out permanently, the FMV of housing them in your house (even though they aren’t there most of the year) counts as parental support. Loans that the student must pay back count as support provided by the student.
As with all things IRS, it can get messy. Here’s a reasonable write-up, although it gets a little thick: [Dependency Exemption Issues for College Students](Dependency Exemption Issues for College Students)
Headline from that page that caught my eye: “Fifth Circuit: “Taxpayer” Means a Person Who Pays Tax” 
Thanks @notrichenough. If I read the linked item correctly, the UTMA/UGMA monies he spent count as his money, and ditto the 529 distributions sent to his school. Winner winner, chicken dinner.
Interesting that the the article implies that the goal is to have an additional dependent, while the focus on CC seems to be having the child be on an independent tax return.
If I understand it right, contributing to 529 is part of allowable gift while paying the tuition directly is not. One may pay the tuition and gift the max but contributions to 529 count against the limit. The net gift is greater if you don’t pay into 529. The same is true with kids’ expenses.
Not sure the 529 money counts as student money. They don’t own the assets like the kids do with a UTMA/UGMA.
The dependent deduction was always worth more to me than the kiddie tax paid, so my goal was to keep them as dependents.
NRE, I think it does since they count 529 contributions as gift. Once gifted it’s owned by the giftee(?). What I don’t understand is why anyone would set up a UTMA/UGMA and take kids’ expenses out of it?
@notrichenough, the dependent deduction was pretty much useless to us, and the unearned income would be preferable at his rate.
@IxnayBob - is that quote for tax purposes our financial aid purposes?
Unlike UGMA/UTMAs, 529 assets are not owned by the beneficiary, the beneficiary can be changed at will, and the money can even be taken back (although there is a penalty).
UGMA/UTMAs are not too useful any more because changes to the tax laws removed most of the benefits, and 529 plans came about to replace them. 529s fixed the ownership risks as well, since the kids can’t decide to just pocket the money when they turn 18.
^^^True. We didn’t put much in the UGMAs because we didn’t want an 18 yo to buy a car with it. We never did 529s because we wanted to throw those funds at regular savings/paying down the mortgage. At least that way the funds were in our control.
He’ll be 24 in two months. No rush on cashing it out or moving it to an IRA.
Lol, I got the quote from your link, but I believe it is for tax purposes.
Some states, NJ among them, don’t give control over UTMA accounts until the owner turns 21, which is plenty of time to spend down the assets if appropriate. Doing so, with documentation, is completely legal.
Haha, I think my eyes had glazed over by that point.
We spent down the first kid’s UGMA before college to try improve our FA situation (UGMAs count as a child asset), but it didn’t make a dang bit of difference.
For the second kid, we just made the UGMA the first money out for college. Neither had more than $10k or so in them, they were gone in the first semester.
They get them at age 18 in my state. I don’t think either one had any idea they had any right to it though, all they knew is there was a “college fund”.
I don’t think I would have put more in the account than I could spend down legally and ethically in a year if they could use them for whatever they wanted at 18.
I also knew that we had zero chance of FA. The kids might have gotten merit money, but it didn’t work out that way.
I know a couple of you have been doing this, so I’m assuming I don’t need to search the IRS for this answer - you’ll be willing to help.
If my kids have made less than 5K per year, and we pay for everything, I’m assuming we can safely have them set up a ROTH IRA for the amount they have made and there will be no negative financial implications. Is that correct? Thanks
With respect to deductions, the Pease amendment is back, so deductions are now reduced for many people.
The Pease amendment affects itemized deductions. The personal exemptions, for ourselves and dependents, is affected by the Personal Exemption Phaseout. They have different income amounts and schedules.
If your income is high enough that you lose your deduction for your kids, congrats! You are making more than we ever did. 
@1214mom, as long as what the “kids have made” is earned income (i.e., no cap gains, no dividends, no interest, etc), you are correct. A Roth contribution cannot exceed their earned income for the year.
They might or might not appreciate it now, but they will appreciate your foresight later when their tax bracket is much higher.
OK…all this talk of Roth IRAs is prompting me to finally do something. Son is home from college, so can he just open one himself now, transferring money from his summer earnings from checking/savings to wherever one opens a Roth IRA? Can he only deposit the after-tax amount of his earnings?
I have seen you all mention Vanguard and am guessing that they do not have a branch the way Fidelity does?
Thanks!
Vanguard does not have a brick and mortar presence, but they have a web site and telephone support. Fidelity and Schwab are the brokerages with more brick and mortar locations. I would avoid doing this at the bank or other brokerages.
If your son earned less than, iirc, $116k as a single person (which is likely, as a college student :)) ), he can deposit a maximum of $5,500 into a Roth, or his earned income, whichever is less. That’s his gross earned income, not his after-tax or take home. Yes, he can do it directly from checking/savings
I think the roth for the kids is the single best financial decisions I ever made for them. We could stop when they’re 25 and their peers could never catch up. My daughter is funny…in high school she asked if she should get a pre-“nub” when she got married.
One of my kids has had an IRA since age 18 months. Converted to a Roth in 1998 when Roth were invented.