Should you stop claiming your son or daughter as a dependent on your taxes?
The amount of financial aid a student receives is tied to the amount of money he or she makes and, more importantly, to the amount of money his or her parents make. This fact makes some parents think that they should cease claiming their child as a dependent on tax forms. Many wonder if this independent status will result in greater financial aid thanks to severing the parents' much greater income.
That truth is that for financial aid purposes, the federal government still believes that parents are chiefly responsible for their child's education whether or not they are classified as independent. Further, independent status is not as simple as not claiming your son or daughter on your taxes. They must also meet one or more of the following six criteria:
- Be at least 24 years old
- Be married
- Be a U.S. Armed Forces veteran
- Be enrolled in a graduate or professional program
- Be an orphan or ward of the court
- Have legal dependents other than a spouse
If none of these criteria are met, it is presumed that you will help your child finance their education, even if you won't. Thus, your income will still be considered for financial aid purposes regardless of their independence in your taxes.
Further, if you claim your son or daughter, you receive the Tuition and Fees Tax Deduction which will allow you to deduct up to $4000 in taxable income. You may also qualify for the Lifetime Learning Tax Credit and Hope Scholarship Tax Credit.
All in all, it is better to claim your child than not.Have any insight on this topic? Want to ask a question or make a suggestion? Click here to leave a comment.
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