Infinity Tax And Financial Service

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Can I claim my college student as a dependent even if they're working?

Yes, parents can generally still claim their college student as a dependent even if the student is working, provided they meet specific IRS criteria for a "qualifying child". The student's income level is not the deciding factor, but rather how much of their own financial support they provide.
Key IRS Requirements for Claiming a College Student
To claim a working college student as a dependent, several tests must be met: the child must be a qualifying relative, under age 24 and a full-time student for at least five months of the year, and must have lived with you for more than half of the year (with temporary absences for school counting as time at home). Crucially, the student must not have provided more than half of their own total financial support for the year, including expenses like food, lodging, and tuition. Additionally, the student generally cannot file a joint tax return.
The Role of the Student's Income
A student's income is not the main factor for determining dependent status. The key is whether their income and other funds cover more than half of their support costs. Money saved by the student does not count as support they provided for themselves.
Filing a Separate Return
A working student can file their own tax return to receive a refund of withheld taxes. However, if they qualify as a dependent on their parents' return, they must indicate this on their own form. They cannot claim their own personal exemption or education credits that the parents may be eligible for. Often, it is more beneficial for parents to claim the student due to potential tax breaks like the American Opportunity Tax Credit or the Lifetime Learning Credit. More details can be found in IRS Publication 501 on the IRS website.

For single taxpayers and married individuals filing separately for tax year 2025, the standard deduction rises to $15,000 for 2025, an increase of $400 from 2024. For married couples filing jointly, the standard deduction rises to $30,000, an increase of $800 from tax year 2024.Oct 22, 2024

Increased Child Tax Credit: The maximum credit is raised from $2,000 to $2,200 per qualifying child for 2025, with a refundable portion of up to $1,700. For 2025, claiming the credit will also require a Social Security number for both the child and at least one taxpayer on the return.

Car loan interest deduction: Taxpayers can deduct up to $10,000 in interest paid on loans for new, U.S.-assembled passenger vehicles. This is subject to income limits and requires the VIN on the tax return.