CASE STUDY #4A: Unmarried Couple, One Working, One a Full-Time Student With a Child
Jack is single and Jill, his girlfriend who is a full-time student, has no income, lived with Jack all year and Jack provided over half her support. Jill has a 16-year-old child who lives with them. Someone other than Jack is paying Jill’s tuition. Jack wants to claim Jill as a dependent so he can claim the AOTC for her education expenses.
Jill’s Dependency – Jill meets the five qualifications of a qualified relative: (1) though she isn’t related to Jack, she was a member of the household for the entire year, (2) her gross income is less than $4,400, (3) Jack satisfies the support test, (4) she is a U.S. Citizen and (5) she does not file a joint return. So, Jack can claim her as a dependent.
Head of Household - Jack cannot claim head of household filing status because the qualifying person must be related to Jack, which Jill is not.
Education Credit – If Jack claims Jill as a dependent then Jack can claim the AOTC for her education expenses.
Potential Problem – If someone else is paying Jill’s education expenses, which are part of Jill’s support, and those expenses equal more than half of Jill’s support, then Jack cannot claim Jill as a dependent.
Jill’s Child – A 16-year-old child is a qualified child if the child meets four qualifications, one of which is the child must be related. There is no support test other than that the child hasn’t provided over half of his or her own support. Therefore, the child is the qualified child of Jill and cannot be claimed as a dependent of Jack. Jill’s child cannot be a qualifying child of anyone else, because she has resided with Jack and Jill for the entire year and one of the requirements of a qualified child is to live with the taxpayer for half the year. As a result, no one else qualifies to claim the child credit for Jill’s child.
Analysis:
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Option 1 – Jack does claim Jill: Jack’s benefit for claiming Jill as a dependent is to get whatever the tuition credit turns out to be. Jill cannot claim her daughter as a dependent because Jill herself is a dependent of Jack.
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Option 2 - Jack does not claim Jill: Jill files single (even without any income) and claims her daughter as a dependent and gets the tuition credit and the refundable child tax credit for her daughter. But if Jack qualified to claim Jill but chooses not to do so, Jill would not be able eligible for the child tax credit.,
Bottom Line: It makes more sense for Jill to file her own return.