A tax professional explained the issue to us. I can't say this is correct or that it is the only thing you need to consider. BUT, here is what I took away from our conversation as being significant in deciding the issue of whether a MIDN or Cadet is a dependent on the parents' tax filings:Question - as a 3C, is DD considered a dependent on our taxes? Last year, we claimed her as she spent more than 6 months at home ... Thanks!
A tax professional explained the issue to us. I can't say this is correct or that it is the only thing you need to consider. BUT, here is what I took away from our conversation as being significant in deciding the issue of whether a MIDN or Cadet is a dependent on the parents' tax filings:
We were told that we/parents could claim DD as a dependent for purposes of our tax filings only if we provided "more than 1/2 of DD's support." The explanation left me understanding that the issue wasn't necessarily a function of how long DD had lived at home. The way it was explained to us, considered that since a service academy provides room and board, education/tuition, and monetary compensation, we'd have to be providing some pretty significant support on our end to prove that we had provided more than 50% of DD's support. In our situation, we ended up concluding that we had not provided the required 50%+ of support. So, we did not include DD as a dependent on our taxes.
I suspect that some parents may approach their child's situation differently and so perhaps they can reach a different conclusion. I'm not vouching for the information we were provided and I expect that everyone's situation has to be analyzed on its own before a conclusion is decided.
I concur with @A1 Janitor's suggestion to talk to a tax professional you trust.
Thanks. I'm not sure it changes our conclusion, but it would make it a much closer call.The IRS told me that the worksheet compares what the child pays vs what the parent pays. Tuition and room and board are paid by neither.
When I prepare taxes - I always do them both ways and give the client the choice.Something to take into consideration. Who would benefit more when they are claimed? You or them? I let DS claim himself as he received a larger benefit then I would have if I tried to claim him. Just food for thought.
Part of our ultimate calculation as well. No question that we wanted DD to see the fruits of her hard work, including associated tax benefits.Something to take into consideration. Who would benefit more when they are claimed? You or them? I let DS claim himself as he received a larger benefit then I would have if I tried to claim him. Just food for thought.
Lmao Do the worksheet and get back to me.In my humble opinion, it would be pretty hard to say you provided over 50% of his/her support after the first year at an academy.
They are employed. They have a W2 with wages and health insurance provided by their employer, aka Uncle Sam. Parents don‘t provide room and board or meals. The exemption is only $500 if you do claim them.
They absolutely don’t qualify for education credits. Service Academies do not issue 1098-T forms and are not “eligible institutions“ for the education credits. So let them be independent and file their own return. They should get a refund if taxes were withheld.
Oh, and just because an IRS agent tells you something doesn’t make it so…..
27 year tax preparer here
LMAO? Laughing My Ass off? Hmmmmm.Lmao Do the worksheet and get back to me.
IRS agent from Practitioner hotline for cpas and lawyers. Not regular agent.
Providing a home while away qualifies. W-2s are minimal. Check the worksheet. What the parent writes a check for vs what the child writes a check for. Not what the academies/government pays. The child doesn’t pay room and board and tuition.
34 year CPA/tax preparer here.
Advise your clients how you want. I will do the same.
Exactly. If parents claim their cadet they receive a $500 non refundable credit on their tax return. Thats it. $500. Cadets should file their own taxes and possibly receive a refund depending on their withholding.Something to take into consideration. Who would benefit more when they are claimed? You or them? I let DS claim himself as he received a larger benefit then I would have if I tried to claim him. Just food for thought.
Service Academies are vastly different than standard colleges. SAs do not qualify for any education credits.We didn’t claim our son (USCGA ‘25) as a dependent last year and will continue in that vein. I would say that the students are paying for their education with their commitment to serve. Which makes it very different than a scholarship at a regular university, in my opinion. Is it different for tax purposes per the IRS? That I don’t know. Good luck to everyone making these decisions!
Wow.When I prepare taxes - I always do them both ways and give the client the choice.
Covid money changed the equation so the child got a bigger benefit.
Do they qualify for EIC? Lol. Not all parents are the same.Exactly. If parents claim their cadet they receive a $500 non refundable credit on their tax return. Thats it. $500. Cadets should file their own taxes and possibly receive a refund depending on their withholding.