EIC? Really? You’re a CPA and are going to use a cadet for a parent to receive an EIC? And you’re going to determine dependency exemption depending on the stimulus bonus checks? I’m stunned by some of your comments. Truly stunned.
Taxes
- Thread starter LS1988
- Start date
EIC? Really? You’re a CPA and are going to use a cadet for a parent to receive an EIC? And you’re going to determine dependency exemption depending on the stimulus bonus checks? I’m stunned by some of your comments. Truly stunned.
A1Janitor
5-Year Member
- Joined
- Dec 22, 2018
- Messages
- 6,465
LOL
You are over the edge attacking a poster. Because you disagree with my professional opinion and research?
I have never claimed a midshipman or a cadet on a client’s or my tax return. I did however use my resources to contact the IRS practitioner hotline to get to the bottom of the issue. And I firmly believe professionally, based on experience and knowledge, that the either parent or the child can claim the exemption based on the law.
As a professional tax preparer, I would present both tax returns prepared both ways, explain the rationale for both sides, and let the client decide.
The covid checks changed the results of who is better to claim exemption - based on previous posts by others. If one believes either can claim it, preparing proper returns for the client’s decision making is important.
You can disagree with my analysis. I am happy that my analysis was supported by the IRS.
No need for further discussion.
usna1985
15-Year Member
- Joined
- Jun 9, 2006
- Messages
- 7,835
In my day (very different tax code), my parents claimed me the year I entered USNA, since I entered on July 6, meaning my parents covered me for > half the year. After that, they did not claim me.
Here's the thing . . . the IRS is not going to have problems with you if you don't claim your SA kid as a dependent. They might if you do. So you have to weigh the strength of your argument that your child is a dependent (especially after the year s/he enters a SA), the financial benefit of the deduction to you, the likelihood you will be audited, and the potential pain if the IRS disagrees with you.
Here's the thing . . . the IRS is not going to have problems with you if you don't claim your SA kid as a dependent. They might if you do. So you have to weigh the strength of your argument that your child is a dependent (especially after the year s/he enters a SA), the financial benefit of the deduction to you, the likelihood you will be audited, and the potential pain if the IRS disagrees with you.
@LS1988 , one more data point: DD USAFA 2024
She claimed herself C4 and all years going forward.
You do you. We didn't consider claiming her, nor did we calculate the '"family" benefit between our returns. Instead, I just focused on educating her. But I do spot check hers. It's nearly a back-of-the-napkin calculation between W-2, 1099 int/div, and Roth IRA contribution. Since DH died August 2022, most of my time is spent educating them on their investments, my investments, and tax implications, plus what to do as my executors.
You do you. Who gets more benefit is a rounding error for us. But it's significant money and/or strategy for others. That $255 one-time social security death benefit was a waste of 2 hours of my life, but pays a significant bill for others.
She claimed herself C4 and all years going forward.
You do you. We didn't consider claiming her, nor did we calculate the '"family" benefit between our returns. Instead, I just focused on educating her. But I do spot check hers. It's nearly a back-of-the-napkin calculation between W-2, 1099 int/div, and Roth IRA contribution. Since DH died August 2022, most of my time is spent educating them on their investments, my investments, and tax implications, plus what to do as my executors.
You do you. Who gets more benefit is a rounding error for us. But it's significant money and/or strategy for others. That $255 one-time social security death benefit was a waste of 2 hours of my life, but pays a significant bill for others.
- Joined
- Apr 9, 2017
- Messages
- 9,280
Lots of help from upper class if asked. TurboTax is free for military. For most, it’s very easy and not complicated….i cant think of a situation where they wouldn’t be able to dump in prompted information into a program. All three of my military men have done their own, quite easily. Ive not heard of anyone hiring a tax professional, myself.
Thank you! I imagine It’s very simple, don’t they have only a W2? I can’t think of any personal expenses they can claim …
A1Janitor
5-Year Member
- Joined
- Dec 22, 2018
- Messages
- 6,465
The moment someone claims a dependent on a return and it is efiled, nobody can claim the same social security number as a dependent.
Happens occasionally where returns have to be amended. And that is a real pain.
Tax attorney here with an LLM in taxation.
Here is the IRS regulation as it relates to dependency:
Code Section 152
(a)
(1) For purposes of the income taxes imposed on individuals by chapter 1 of the Code, the term "dependent" means any individual described in paragraphs (1) through (10) of section 152(a) over half of whose support, for the calendar year in which the taxable year of the taxpayer begins, was received from the taxpayer.
(2)
(i) For purposes of determining whether or not an individual received, for a given calendar year, over half of his support from the taxpayer, there shall be taken into account the amount of support received from the taxpayer as compared to the entire amount of support which the individual received from all sources, including support which the individual himself supplied. The term "support" includes food, shelter, clothing, medical and dental care, education, and the like. Generally, the amount of an item of support will be the amount of expense incurred by the one furnishing such item. If the item of support furnished an individual is in the form of property or lodging, it will be necessary to measure the amount of such item of support in terms of its fair market value.
The worksheet referenced in this thread was designed for all people and does not take into account the 4,000 or so plebes/airmen/midshipmen, etc. each year. Also, a Service Academy does meet the definition of a college and the benefits do not meet the definition of a scholarship. Given that we did not give DS over 1/2 of his support when viewed with his earnings and expenditures, together with the support received from West Point and the US Government, and based on the regulations, we chose to not claim DS as a dependent.
Hope this provides some clarity.
Here is the IRS regulation as it relates to dependency:
Sec. 1.152-1 General definition of a dependent.
Code Section 152
(a)
(1) For purposes of the income taxes imposed on individuals by chapter 1 of the Code, the term "dependent" means any individual described in paragraphs (1) through (10) of section 152(a) over half of whose support, for the calendar year in which the taxable year of the taxpayer begins, was received from the taxpayer.
(2)
(i) For purposes of determining whether or not an individual received, for a given calendar year, over half of his support from the taxpayer, there shall be taken into account the amount of support received from the taxpayer as compared to the entire amount of support which the individual received from all sources, including support which the individual himself supplied. The term "support" includes food, shelter, clothing, medical and dental care, education, and the like. Generally, the amount of an item of support will be the amount of expense incurred by the one furnishing such item. If the item of support furnished an individual is in the form of property or lodging, it will be necessary to measure the amount of such item of support in terms of its fair market value.
The worksheet referenced in this thread was designed for all people and does not take into account the 4,000 or so plebes/airmen/midshipmen, etc. each year. Also, a Service Academy does meet the definition of a college and the benefits do not meet the definition of a scholarship. Given that we did not give DS over 1/2 of his support when viewed with his earnings and expenditures, together with the support received from West Point and the US Government, and based on the regulations, we chose to not claim DS as a dependent.
Hope this provides some clarity.
Dont forget their dozens of investment accounts.
Also, a Service Academy does meet the definition of a college...
[/QUOTE
Any documentation supporting this? That seems to have lots of opinions, since not eligible for education expenses or other tax relief, but does have full time enrollment and regularly scheduled classes.
Justme, that line was a gratuitous misstatement after I quick read of the code and regs. So disregard.
[/QUOTE
Any documentation supporting this? That seems to have lots of opinions, since not eligible for education expenses or other tax relief, but does have full time enrollment and regularly scheduled classes.
Justme, that line was a gratuitous misstatement after I quick read of the code and regs. So disregard.
Falcon74
10-Year Member
- Joined
- Feb 26, 2011
- Messages
- 148
Personally, I would think that it would be a rare situation where parent(s) provided more than 50% of the DD/DS’s support as a first year Cadet.
However, parents should be helping their DD/DS with a different tax related question -- understanding the benefits of creating/using a Roth IRA account – even as a Cadet! Although all Cadets have earned income and file a tax return, they frequently pay essentially no taxes which provides a unique opportunity.
Normally, citizens pay the taxes on earned income before it can be invested in a Roth; however, in the case of Cadets, that tax is frequently zero because their taxable income is so low. A Cadet benefits from both (essentially) zero taxes on the front-end of a Roth investment and zero taxes when withdrawn at retirement time. The chief problem would be having funds to invest knowing that the Cadet would not want to withdraw the funds until retirement time to avoid penalties.
I'm sure that each Cadet has different financial circumstances, but as a parent, you might want to take the time to check it out.
However, parents should be helping their DD/DS with a different tax related question -- understanding the benefits of creating/using a Roth IRA account – even as a Cadet! Although all Cadets have earned income and file a tax return, they frequently pay essentially no taxes which provides a unique opportunity.
Normally, citizens pay the taxes on earned income before it can be invested in a Roth; however, in the case of Cadets, that tax is frequently zero because their taxable income is so low. A Cadet benefits from both (essentially) zero taxes on the front-end of a Roth investment and zero taxes when withdrawn at retirement time. The chief problem would be having funds to invest knowing that the Cadet would not want to withdraw the funds until retirement time to avoid penalties.
I'm sure that each Cadet has different financial circumstances, but as a parent, you might want to take the time to check it out.