<p>My S#2 is still a college student, under 24, but worked full time half the year (co-op) and made some decent money. We paid tuition out of a 529 plan. I don’t know if that counts, but even if it did he made more than that. He will gain a tax benefit by claiming himself on his own tax return so we are not claiming him as an exemption (dependent) on our tax return. This is quite a milestone! The older S#1 on the other hand we are still claiming on our tax return (I guess as a “qualifying relative”). I still am not sure if 529 money used to pay tuition counts towards our providing more than 50% of his support. </p>
<p>Anyone else facing this dilemma? It’s one thing when they graduate HS and leave home, (get married, have babies) … but when that day arrives when you can no longer claim them as an exemption… sniff… I get all choked up.</p>
<p>We lost our oldest as a dependent last year, we noticed that on our tax return but it made a HUGE difference in his refund and since he earned that money, he should be getting the benefit of that. It’s in his house down payment fund now so we are ok with that. What will really hurt is next year we lose 2 big dedications (twins will be 18) and we have some nice credits/deductions for school expenses for K-12 that we will lose as well (state taxes). Plan is to sock more away in IRA and 401K to reduce taxable income.</p>
<p>SteveMA…do you mean “deductions”? Why would you lose your 18 year olds as deductions? If they are college students, you can still have them as deductions on your return, and you might actually be better. Run the numbers both ways. We did, and it was financially beneficial for US to have the kids as dependents while in college.</p>
<p>There is some deduction we can take for kids age 17 and under (state). Add that to the loss of the state deductions for educational expenses and it’s about a $5000+ swing.</p>
<p>Son is 22 and off our returns for 2012. The tax benefit to him will be bigger than the tax benefit to us. I have been expecting this for a while as should all parents as their kids make more money from summer internships and part-time jobs.</p>
<p>On the positive financial side, you aren’t incurring expenses for them for food, electricity, transportation, etc.</p>
<p>S1 was no longer on our return in 2009 (he graduated college in 2008 and is on his own). S2 graduated in Dec 2011, so this was the last year we could claim him. He needs all the exemptions he can get now since he lives in an expensive city and is earning just enough to support himself.</p>
<p>What we’ve gained from not having to pay for tuition, room, board more than makes up for the deductions we’ve lost.</p>
<p>What SteveMA is talking about is the child tax credit which can be up to $1000 per child under the age of 17 depending on parents’ income. Why the IRS thinks you should lose this when they turn 17 is beyond me. This is on the Federal return.</p>
<p>3bm103–there is that one too but we don’t qualify for that. It’s something on our state taxes, not federal. I could dig through my taxes to figure out what it is but I don’t want to :D.</p>
<p>This is our second year without DS on our taxes.
It is also the first year he has ‘real’ income from his first real job.
Wish I could say it was fun showing him how to Turbotax. It was satisfying to know he will do his own on his own next year.</p>
<p>Am enjoying not paying his cell phone, car insurance, food, etc.
And he still lives close so I get to see him.</p>
<p>All the advantages and none of the burdens.</p>
<p>My oldest has been trying to claim his own exemption for a couple of years now, thinking that somehow that made him more independent. This year (he graduated last May) he went ahead and filed his taxes as soon as he received his W-2…and before we realized that that meant we could not claim the American Opportunity credit. Arggghhhh!</p>
<p>We made him file an amended return, claim the credit and extracted a promise from him to SEND US THE $2500 as we had been counting on that amount in our own tax planning. I’m happy he’s out and on his own, but a little warning would have been nice!</p>
<p>My son earned a lot as well, but he lived under our roof and we paid his car insurance, provide health insurance, and provide cable/phone.internet and provided all that goes with living here. He paid for his car, gas and any food he got when he didn’t find what he wanted in the house. Regardless of what he earned he spent it on “Fun” not “support.” He does put a lot in savings so we don’t mind supporting him as long as we can afford it. I thought he was saving for a house, but he mentioned saving to open his own business. Either works for me!</p>
<p>We use turbo tax and basically I run it a few times using him claiming himself, and us claiming him. I add up the total that the gov’t gets in each scenario and for whatever reason it works out best for us to claim him. </p>
<p>In the past he has withheld “1” when he should take “0”. This meant he owed a few hundred at the end of the year, which we paid because we were claiming him. This year they seemed to take out more, and there was loss in his college UGMA account, so he got a small refund for once. Also, tuition is paid by us or his grandmom (she has a 529 for him), so we get the tuition credit.</p>