Student filing taxes, need some guidance.

[TaxGuy0915]

Indiana - This is my second time filing taxes and I just wanted to clear a few things up before I go ahead and do it this year. I am 21 years old, a full time student, I live in Indiana and I made just over 5k last year from my job. I live with my parents and my tuition is put on my father’s credit card, but I then pay him with cash from bonds that I have in my name, which I had cashed in 2008.

When I filed last year, I filed as a dependent because my dad claimed me on his taxes. However, since I am over 17 I do not qualify for the child tax credit. He also did not get $300 for me from the economic stimulus but he did for my brother who was 16. I did not get any stimulus when I filed my taxes as a dependent. Are we doing the right thing by claiming me as a dependent? Or should I be filing as a independent?

Also, all those bonds are tax exempt when used for education. Since I cashed them they’re income for me. But my dad was the one who paid the tuition with the credit card. The money from the bonds did go to his credit card to pay that off though. So how do I show my tuition payments when I file so I don’t pay interest on those bonds?

Just a little bit more information; my parents file jointly but my mom doesn’t work. My dad made about 100K last year and I have a brother who was 17 in 2008, and is now 18 as of Jan 6th 2009.


Those are a few points I’d like to clear up before I begin anything. I’m sure there’s more I’m missing, but I’ll come up with it later. Any advice you can pass on would be greatly appreciated.

[LdiJ]

Originally Posted by TaxGuy0915

Indiana - This is my second time filing taxes and I just wanted to clear a few things up before I go ahead and do it this year. I am 21 years old, a full time student, I live in Indiana and I made just over 5k last year from my job. I live with my parents and my tuition is put on my father’s credit card, but I then pay him with cash from bonds that I have in my name, which I had cashed in 2008.

When I filed last year, I filed as a dependent because my dad claimed me on his taxes. However, since I am over 17 I do not qualify for the child tax credit. He also did not get $300 for me from the economic stimulus but he did for my brother who was 16. I did not get any stimulus when I filed my taxes as a dependent. Are we doing the right thing by claiming me as a dependent? Or should I be filing as a independent?

Also, all those bonds are tax exempt when used for education. Since I cashed them they’re income for me. But my dad was the one who paid the tuition with the credit card. The money from the bonds did go to his credit card to pay that off though. So how do I show my tuition payments when I file so I don’t pay interest on those bonds?

Just a little bit more information; my parents file jointly but my mom doesn’t work. My dad made about 100K last year and I have a brother who was 17 in 2008, and is now 18 as of Jan 6th 2009.


Those are a few points I’d like to clear up before I begin anything. I’m sure there’s more I’m missing, but I’ll come up with it later. Any advice you can pass on would be greatly appreciated.

You are still your parent's dependent and you should file as such. As long as you are a student and they are providing more than 50% of your support, (which they clearly are) you are their dependent.

On top of that, there are other factors which would make it economically foolish for you to be claiming yourself rather than your father claiming you. Those factors far outweigh the piddling 300.00 economic stimulous that no one got for you last year. You didn't even make enough money to take advantage of your personal exemption (which is what claiming yourself is all about), which is only one of the economic factors.

Example:

Lets say that you made 10,000 instead of 5,000. 10,000 minus your standard deduction of 5450.00 and your personal exemption of 3500.00 leaves you with taxable income of about 150.00 and tax of 15.00. You are in the 10% tax bracket so the value of your exemption is 350.00. So if you don't take your personal exemption your tax is 365.00. (at 10,000 of income)

Your dad however is in the 25% tax bracket, so the value of your exemption on his return is 875.00.

Its a no brainer right there, and that doesn't even take into consideration the other economic factors. For another example, as long as you are his dependent he can include you on his health insurance. Once you are no longer his dependent, he cannot do so....and the list goes on.

[TaxGuy0915]

Ok, thank you for clearing that up, it makes much more sense now.

Now what should we do with claiming my tuition? I just got my W2 and I made
$5549 last year. I also had $183 in interest paid to me from my savings/cds. I also cashed about $6000 in bonds, of which, $4086 was interest. My tuition was $5681 for the year.

My dad put the tuition on his credit card, but I paid him with the bond money. The bond's interest are tax exempt as long as they're used for education. Do I put my education expenses on my taxes or does my dad put them on his? I'm asking because the income from the bonds is mine, and I need to prove that they were put towards education. Or do we do that on my dad's taxes?

Thank you very much, you've been very helpful so far!

[TaxGuy0915]

Anyone have a bit of advice?

[davew128]

Originally Posted by TaxGuy0915

Anyone have a bit of advice?

Besides getting rid of a screenname that clearly doesn't reflect reality?

[TaxGuy0915]

Originally Posted by davew128

Besides getting rid of a screenname that clearly doesn't reflect reality?

I came here for help with my taxes. Not to be talked down to by other members. If you don't have anything worthwhile to contribute, don't post in here please.

[LdiJ]

Originally Posted by TaxGuy0915

Ok, thank you for clearing that up, it makes much more sense now.

Now what should we do with claiming my tuition? I just got my W2 and I made
$5549 last year. I also had $183 in interest paid to me from my savings/cds. I also cashed about $6000 in bonds, of which, $4086 was interest. My tuition was $5681 for the year.

My dad put the tuition on his credit card, but I paid him with the bond money. The bond's interest are tax exempt as long as they're used for education. Do I put my education expenses on my taxes or does my dad put them on his? I'm asking because the income from the bonds is mine, and I need to prove that they were put towards education. Or do we do that on my dad's taxes?

Thank you very much, you've been very helpful so far!

Since you are your parent's dependent, again, the tuition deduction goes on your parent's tax return. The same principal applies. The tuition deduction is of little use to you anyway, and is far more valuable in your parent's marginal tax bracket.

As far as the bond interest is concerned, were the bonds solely in your name? If not, who was the other party?

[TinkerBelleLuvr]

I would have a tax pro have a look at doing both your taxes and parent's taxes at the same time. I know that we have done the children's taxes for minimal costs when done at the same time as the parents' taxes.

You should get the exemption for the interest but ... the same tuition cannot be looked at for use on the educational credits. Basically, no double dipping.

[LdiJ]

Originally Posted by Ginny J

I would have a tax pro have a look at doing both your taxes and parent's taxes at the same time. I know that we have done the children's taxes for minimal costs when done at the same time as the parents' taxes.

You should get the exemption for the interest but ... the same tuition cannot be looked at for use on the educational credits. Basically, no double dipping.

And odds are, the tuition and fees deduction (dad makes too much money for educations credits) is probably worth far more than the tax on the interest on the bonds.

[davew128]

Originally Posted by TaxGuy0915

I came here for help with my taxes. Not to be talked down to by other members. If you don't have anything worthwhile to contribute, don't post in here please.

Ok..."TaxGuy".