Tax Planning for Graduating College Senior headed to Graduate School

You should check this out with the IRS but here’s an idea - If she has and will continue to live in her own apartment(s) and establishes legal residency there, then even if she is a full time student and you provide more than 50% of her support, you will not be able to claim her as a dependent for tax purposes because she doesn’t live with you (and her absence from your house is not temporary).

She can then claim herself as an exemption on her own tax return.

Remember that the portions of a graduate school stipend that are not earmarked for tuition/fees count as taxable income (I think). They would count as a means of support too.

I don’t know if this completely solves your problem, but it’s a start. Why is it important for her to be able to claim that she provides more than 50% of her own support?

As a practical matter, I really really doubt the IRS is going to audit a full-time graduate student to determine whether she is independent if she says she is as long as she is earning a few thousand dollars of income. They are usually far more worried about the reverse - i.e. parents inappropriately claiming an adult child as a dependent or the same person being claimed as an exemption on two different returns.