Looking for opinions on what to do about college student. I have not yet filed my 2019 taxes. My daughter (age 20 now) left college after spring semester in 2019. She worked FT for the remainder of the year, earning around 20k. She returned to college FT in January 2020.
I haven't filed my 2019 taxes yet nor has she. I am considering not claiming her as a dependent for 2019 as she provided more than 50% of her own support. The tuition for the 2019 spring semester was paid in full by me in December of 2018. Her tuition for the spring 2020 semester was paid in full by me in January of 2020. I made no tuition payments during 2019.
So would she qualify for the $1200 stimulus if I do not claim her as a dependent on my 2019 taxes? I will end up increasing my tax liability for 2019 by $500 if I do not claim her but she will in turn receive $1200. Am I missing anything? Is it too late to file and have our 2019 numbers used for immediate stimulus payment instead of 2018? WWYD?
You can determine if she provided more than half of her own support by going to Worksheet 2 in IRS Pub 501. The exact rules for filling it out are not clear, but you may need to put the expenses for her 2019 spring semester on line 15 even though you paid them in 2018, since it's asking for the expenses, which were incurred in 2019, not the payments, which were made in 2018. Note that in general the support test hinges on who paid for the basics of living, not how much she made.
If she provided more than half of her own support, then she does not qualify as your dependent child nor as your dependent relative because she fails the support test.
If she is not your dependent in 2019, you would not list her and she could file her own return. You would lose the $500 credit for other dependents and she would receive the $1200 (assuming she otherwise qualifies; a 20 year old college student typically would).
I don't know if it's too late to file. The direct deposits are supposed to be going out next week, but they haven't said if they're going to do any sort of "mop up" activities for people who are in your situation and are filing 2019 returns over the next few months. I would guess they would, but I don't know for sure. If at all possible, I would encourage you and your daughter to file electronically because electronic returns are received and processed by the IRS much more quickly than paper returns.
I would recommend following the fact pattern and filing as appropriate. Do note that if your daughter cannot be claimed as your dependent in 2020, she can file and get the $1200 payment on her 2020 return which she files approximately a year from now. She would still get the money in that scenario, however it would be up to a year later than the stimulus check.
