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What's a 'dependent' to the IRS?

Some grownup children qualify — and some don't

Question: Is there a cutoff age beyond which you cannot claim a child as a dependent, even though you are still providing the majority of his support? I have a 24-year-old who is a student-chef.

Answer: Yes, there is an age cutoff, and, unfortunately, your son has reached it. But you still may be able to claim him as a dependent.

You can claim a child you support as a dependent until age 24 if he or she is a full-time student for at least five months of the year. Because your son is already 24, he doesn't qualify as a dependent even though he is still a student.

However, children 24 and over can be claimed as dependents if they meet two criteria: The child cannot have earned more than $2,800 in 2000, and you must have provided more than half of the child's support.

You say you provide the majority of your son's support. So the determining factor is how much your son earned as a chef. If his gross income was less than $2,800 last year, you can still claim him.

Question: My daughter is studying at a university in another state. She has received some scholarships, and she also made several hundred dollars working part-time at school. Does she have to report the scholarships as income? Does she have to file a state income-tax return in the state where she goes to school?

Answer: Your daughter probably doesn't have to report her scholarships as income. For students pursuing a degree, the value of grants for tuition and course-related expenses is tax-free. Any part of a grant that goes for room, board or incidental expenses, however, is taxable income for the student.

Your daughter didn't earn enough to trigger a federal income-tax obligation, so it's likely she doesn't owe state tax, either. Check with the financial-aid office at her school to find out how the rules work in that state.

Question: We have a working 16-year-old. We're not sure how she should file her W-4. We can claim her as a dependent, but she wants to know if she can get back the taxes they take out of her small paycheck.

Answer: Even though you're claiming your daughter as a dependent, she's permitted to claim one allowance on her W-4. That should help keep a little more money in her pocket.

To get back money already withheld, your daughter should file a tax return. Note: Social Security taxes are not refundable.


Have a question about kids and finances for Dr. Tightwad? Write to Dr. T at 1729 H St., N.W., Washington, DC 20006. Or send the good doctor an e-mail message (and any other questions for this column) to jbodnar@kiplinger.com.