Can a 19 year old get AOTC? She made 12K, has a child of her own and says she's independent.

[giogis245]

I am not sure about this so coming here for guidance.  I have a 19 year old who made 12K, he has a dependent of herself who is a few months old.  She says she's independent and she provides more than 50% of her own support.  Can she claim the AOTC?  

[Pacun]

yes, as long as she is not a qualified child of another tax payer. If she is not a qualified child, she will get: EIC, additional child tax credit, Stimulus of 500 and 600 for the child, if she was a dependent in 2019, she will get stimulus for her too which will be $1,200 and $600 AND she will get up to $1000 refundable AOC. She will get more money from the IRS and state(s) than the net she received from her job.  

[Randall]

Is she living outside her parents home? On her own?  On $12k?  I have one coming up.  Daughter and granddaughter baby living with parents/grandparents.  I'm thinking the parents have both daughter and granddaughter as dependents.

 

[Pacun]

Randall.... if she is 19 and NOT a full time students, then she is not a qualifying child because she earned too much ($12K).

[Randall]

47 minutes ago, Pacun said:

Randall.... if she is 19 and NOT a full time students, then she is not a qualifying child because she earned too much ($12K).

In my case, she is a full time student.

 

[Pacun]

Then she must have provided more than 50 percent of her own support.

[Catherine]

On 3/5/2021 at 8:54 PM, Pacun said:

Then she must have provided more than 50 percent of her own support.

And yes this is possible to do.  I was out on my own, working full time while going to school full time, starting senior year of high school.  Graduated, and got through MIT - and used up my lifetime supply of all-nighters in so doing.  NOT recommended.  But definitely possible.  Doing that with a wee one too... ugh.  She has my sympathy!

[Tracy Lee]

She won't get Earned Income Credit; you have to be between 25-65 to qualify for that, right?

[jklcpa]

12 minutes ago, Tracy Lee said:

She won't get Earned Income Credit; you have to be between 25-65 to qualify for that, right?

Those under 25 can get EIC if they have a child and meet the other tests.  The 25 to 65 rule is for those that don't have a child but meet the other requirements.

[Pacun]

You can be 10 years old and qualify for EIC.

[Randall]

9 hours ago, Catherine said:

And yes this is possible to do.  I was out on my own, working full time while going to school full time, starting senior year of high school.  Graduated, and got through MIT - and used up my lifetime supply of all-nighters in so doing.  NOT recommended.  But definitely possible.  Doing that with a wee one too... ugh.  She has my sympathy!

Whoa!  Amazing.

 

[Catherine]

On 3/10/2021 at 6:00 AM, Randall said:

Whoa!  Amazing.

 

Seriously NOT recommended.  Trust me on this one!

[Lion EA]

Ah, the energy of youth!

[grandmabee]

On 3/4/2021 at 5:09 PM, Pacun said:

yes, as long as she is not a qualified child of another tax payer. If she is not a qualified child, she will get: EIC, additional child tax credit, Stimulus of 500 and 600 for the child, if she was a dependent in 2019, she will get stimulus for her too which will be $1,200 and $600 AND she will get up to $1000 refundable AOC. She will get more money from the IRS and state(s) than the net she received from her job.  

I thought you couldn't get refundable AOC if you were under 24???

 

[jklcpa]

1 hour ago, grandmabee said:

I thought you couldn't get refundable AOC if you were under 24???

 

 

American Opportunity Tax Credit - Exception for Under Age 24 Taxpayers

Self-supporting taxpayers claiming the AOC for themselves, will not qualify for the credit if they fall under Rule 1, or 2 or 3.

Rule 1:  Taxpayer is under age 18.

Rule 2:  Taxpayer is age 18 and earned income (employee or self-employed) is less than one- half of total support.

Rule 3:  Taxpayer is over age 18 and under age 24 AND is a full-time student AND earned income is less than 50% of total support AND has at least one living parent AND is using a filing status other than a joint return with a spouse.

[Pacun]

6 hours ago, jklcpa said:

 

American Opportunity Tax Credit - Exception for Under Age 24 Taxpayers

Self-supporting taxpayers claiming the AOC for themselves, will not qualify for the credit if they fall under Rule 1, or 2 or 3.

Rule 1:  Taxpayer is under age 18.

Rule 2:  Taxpayer is age 18 and earned income (employee or self-employed) is less than one- half of total support.

Rule 3:  Taxpayer is over age 18 and under age 24 AND is a full-time student AND earned income is less than 50% of total support AND has at least one living parent AND is using a filing status other than a joint return with a spouse.

Let me think about my answer

 

[Pacun]

Support is key in this one. AS long as support is more than 50% from the student and is over 18, he/she qualifies.

[jklcpa]

2 hours ago, Pacun said:

Let me think about my answer

 

My answer was specific to those NOT qualifying for the refundable portion that grandmabee asked about.  I edited to add a note in red at the beginning of my post to make that more clear.

[grandmabee]

So  I have a 19 full time student and makes 21,000.  usually away at college but this year 2020 all classes were online.  Lives at home but there is  7 people living in the house.  Parents income about 90,000.  They did not claim as dependent.  Does he get the refundable part of AOC?

 

[Lion EA]

Did he pay more than half his own support? What did he spend his $21,000 on? Did he save some of it? Did you do the support worksheet with the parents and with the student?

[jklcpa]

I'll second the need for the support worksheet.  Also, keep in mind that student loans used to pay college expenses that the student is obligated to repay are considered to be support provided by the student.

[Hahn1040]

Indeed, the worksheet is critical in getting the numbers to determine who provided how much.

Keep in mind that the critical part of the refundable portion is not just that the student provided more than 50% of own support- that is the determining factor in claiming herself.  For the AOTC it requires that more than 50% is from earned income.

SO, while the student loans represent support she provides, it is not earned income.  so if she has $12,000 in wages that she used for support and $15,000 in student loans that she used to pay tuition, the 50% is not earned income.   You have to look at the total support she provided and how much of it was earned income.

[TexTaxToo]

22 hours ago, jklcpa said:

 

American Opportunity Tax Credit - Exception for Under Age 24 Taxpayers

Self-supporting taxpayers claiming the AOC for themselves, will not qualify for the credit if they fall under Rule 1, or 2 or 3.

Rule 1:  Taxpayer is under age 18.

Rule 2:  Taxpayer is age 18 and earned income (employee or self-employed) is less than one- half of total support.

Rule 3:  Taxpayer is over age 18 and under age 24 AND is a full-time student AND earned income is less than 50% of total support AND has at least one living parent AND is using a filing status other than a joint return with a spouse.

Actually, the part of your Rule 3 I changed to red has to be added to Rule 1 and Rule 2 also.  Or to put it another way, taxpayers of any age qualify for the refundable credit if they have no living parents, or file a joint return.

[jklcpa]

Thank you!

 

[Randall]

I'm not sure if I'm reading this correctly.  Person under 24 provides over 50% of his support.  Rule 1c.  But when answering the questions, both ATX and IRS 8863 instructions, question 5 seems to contradict things.  Was your earned income LESS than half your support?  If I answer no, this means it is greater than half.  But it tells me to stop, you canNOT take the refundable part of the credit.  If I answer yes (which is inaccurate), it tells me to continue, then with a living parent, not filing a joint return, it again says you don't qualify for the refundable part of the credit.