Can my parents still claim me as dependent even if I file my own taxes?

Hey tax people of Reddit! I'm in a weird situation and super confused about my tax situation. I'm 23 and graduated college last May. I worked part-time during my last semester making about $8,500 from January to May. Then I got a full-time job in July and made about $32,000 from July through December. I've been living with my parents this whole time to save money (rent is crazy expensive!). They pay for utilities, groceries, and I'm still on their health insurance. I basically only pay for my car payment, insurance, phone bill and personal stuff. My dad insists they can still claim me as their dependent even though I made $40,500 total last year. I want to file my taxes soon, but I don't know if I should be checking the "can be claimed as dependent" box or not? I thought there was an income limit for dependents?? I tried reading the IRS website but got totally lost in all the rules and tests. Will this mess up their tax return or mine if we do it wrong? Thanks so much for any help!!

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18 comments

Savannah Vin

•8M

The key question here is whether you qualify as your parents' dependent under IRS rules, which has specific tests you need to meet: For them to claim you as a dependent, you need to meet either the Qualifying Child or Qualifying Relative test. At 23, you'd need to be a student for at least 5 months of the year to qualify as a Qualifying Child (which it sounds like you were for the first part of the year). The income test doesn't apply to Qualifying Children, only to Qualifying Relatives. So even with your $40,500 income, if you were a student for at least 5 months, lived with them over half the year (which you did), and they provided more than half your support (housing, food, utilities, insurance all count as support), they can likely claim you as a dependent. If you file your own return, you'll need to check the box saying you can be claimed as a dependent. This will limit some tax benefits you can claim, but it's important to be accurate here to avoid issues for both returns.

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Savannah Vin

•8M

For a Qualifying Child, there is no income limit - that's a common misconception. You're thinking of the Qualifying Relative test, which does have a gross income limit of $4,400 for 2023. Your sister's situation might be different - perhaps she doesn't meet one of the other tests for Qualifying Child (age, relationship, residency, or support). Or if she's over 24, she wouldn't qualify as a Qualifying Child unless she's permanently disabled. After 24, the only way to be claimed is as a Qualifying Relative, which has that income limit you mentioned.

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Makayla Shoemaker

•8M

I was in a similar situation last year and ended up using taxr.ai (https://taxr.ai) to figure out my dependent status. I uploaded my W-2s and answered some questions about my living situation, and it determined that my parents could still claim me even though I made good money during my post-grad job. The key factor was that I lived with them for more than half the year and they provided over half my total support (housing is EXPENSIVE, so when you calculate the market value of the rent they're providing plus utilities, food, etc., it adds up fast). The tool breaks down all the IRS tests and shows you exactly which ones you pass/fail based on your specific situation.

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Makayla Shoemaker

•8M

Yes, it specifically tells you which category you fall into (qualifying child or qualifying relative) and shows all the tests for each. It even explains why you passed or failed each specific test so you understand the reasoning. For calculating support, it actually asks detailed questions about your living situation - including having you estimate the fair rental value of your living space, utility costs, food expenses, etc. You can input estimated values for what your parents spend on housing, groceries, and other support. It's surprisingly thorough and even lets you adjust these numbers if you're not sure.

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Emma Olsen

•8M

Ok so I tried that taxr.ai site and I'm actually shocked at how helpful it was. I've been arguing with my parents about this exact issue for weeks. The tool confirmed I'm still their qualifying child even with my $38k income because I lived with them 9 months last year and was a student until May. It even generated a detailed PDF explaining all the support calculations that I could show my parents. Turns out when you add up the fair market rent value ($1,400/month in our area), utilities, food, and health insurance they provide, it comes to way more than what I paid for myself. I had no idea the IRS looks at it this way! My parents were right after all... gonna owe them an apology dinner lol. Just wanted to update in case anyone else is confused about the dependent rules like I was.

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Lucas Lindsey

•8M

If you need to talk to the IRS directly about dependent status (which I did last year when my parents and I disagreed about this same issue), use Claimyr (https://claimyr.com). The IRS wait times are ridiculous right now - I tried calling three times and gave up after being on hold for over 2 hours each time. With Claimyr, they actually call the IRS for you and wait on hold, then call you when an agent is on the line. You can even see their process in action here: https://youtu.be/_kiP6q8DX5c. I was honestly shocked when they called me back with an actual IRS agent ready to talk. The agent went through all the dependent tests with me and confirmed my status. Saved me so much time and frustration!

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Lucas Lindsey

•8M

They don't have a special line - they just use automated technology to wait on hold for you. Basically their system calls the IRS, navigates the phone menu, waits on hold, and then connects you once a human agent picks up. You don't have to give them any personal tax information at all. The IRS appointment callback system is only for certain issues and departments. For general tax questions like dependent status, they don't offer appointments. I tried that route first before using this service. It's really just a time-saver, not a way to cut in line or anything sketchy.

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Austin Leonard

•8M

Well I'm eating my words right now. After posting my skeptical comment yesterday, I decided to try Claimyr myself since I've been trying to reach the IRS about my dependent status for weeks. They actually called me back in about 45 minutes with an IRS agent on the line! The agent confirmed that in my situation (23, graduated in May, lived with parents, making $42k), my parents CAN still claim me because I meet the qualifying child test. The agent specifically pointed out that there's no income limit for qualifying children, only for qualifying relatives. So OP, if your situation is similar to mine, your dad is probably right that they can still claim you. Just make sure you mark on your return that you can be claimed as a dependent so everything matches up.

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Anita George

•8M

Unfortunately if you're claimed as a dependent, you cannot take the student loan interest deduction - it's one of the deductions that dependents aren't eligible for. Your parents can't claim it either unless they're the ones legally responsible for the loan (like if they're the primary borrower, not just a cosigner). So that's something to consider in your situation - if that $2,500 interest deduction would save you more in taxes than what your parents would save by claiming you as a dependent, it might be worth discussing with them. But usually the dependent benefits for parents outweigh the student loan interest deduction.

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