I've filed as a dependent under my parents for the entire time I've been doing taxes, and now, since I'm 22 and am making more money than I have in the past, I'd like to file myself as independent. Is this going to have negative implications for my parents? I just graduated from college this year, and they pay for my college education, but I will not be in college in the future.

Since you graduated in 2010, your parents could claim you as a dependent this year as long as (a) you were a full-time student through May (at least 5 months of the year), (b) you live with them at least half the year, and (c) you do not provide at least half your own support for the year. Assuming all this, if they are in a higher tax bracket than you then they get more benefit from claiming you as a dependent than you get from claiming yourself. Also, there are tax credits for education costs that they may be eligible to take only if they claim you as a dependent. So I suggest you sit down with your parents and talk it over.

Starting next year they will not be able to claim you as a dependent, since you are no longer a full time student and (I assume) will have more than $3650 in income.

I recommend that the returns be modeled BOTH ways (by a paid tax pro) to determine if your parents get a greater tax benefit from claiming your dependency exemption. There are so many variables (education credits, income levels for you and your parents, AMT considerations, etc.) that such modeling is the only way to be sure which way is best.

If it turns out that your parents get a great tax benefit from claiming you, they can compensate you for losing the exemption.

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Originally Posted by ebaines

Since you graduated in 2010, your parents could claim you as a dependent this year as long as (a) you were a full-time student through May (at least 5 months of the year), (b) you live with them at least half the year, and (c) you do not provide at least half your own support for the year. Assuming all this, if they are in a higher tax bracket than you then they get more benefit from claiming you as a dependent than you get from claiming yourself. Also, there are tax credits for education costs that they may be eligible to take only if they claim you as a dependent. So I suggest you sit down with your parents and talk it over.

Starting next year they will not be able to claim you as a dependent, since you are no longer a full time student and (I assume) will have more than $3650 in income.

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I will be a student until December of 2010 (post bacc), but only lived with them for a month of 2010. I don't provide half my support, though.

So is that the rule? If I make more than $3650 in 2010 I cannot be a dependent? Or is it that I have to make less than that OR be a student to be a dependent?

If you were away from home because you were attending college, then that's considered a "temporary absence," and can count towards time living at home.

In order for your parents to claim you as a "quallifying child" and hence as a dependent you must meet all the foillowing requirements:

1. Either be under age 19 at the end of the year, or be under age 24 and a full-time student (again, that means at least 5 months).
2. You must provide less than half your own support
3. You must live at home (or be away on a temporary absence such as for school, vacation, etc) for 1/2 the year.

Note that it doesn't matter what your income is - you can still be a "qualifying chilld," and hence a dependent of your parents

Once you are no longer a full-time student, because you are over 19 you are no longer a "qualifying child." However, you may be considered a "qualifying relative" - and hence still claimed as a dependent by your parents - but the rules are a little diferent:

1. Your income must be less than $3650, and
2. Your parents must provide at least half your support.

Basically it appears that you can be a dependent this year, but probably not in 2011 (assuming you get a job that pays more than $3650). Hope this helps.