Surely they can't claim me as a dependent against my will...can they?
February 21, 2011 5:22 PM Subscribe
In order to establish residency for grad school, I have to file my taxes independently as a resident of my new state. This weekend, I discovered my parents have already filed, claiming me as a dependent. Please help me.
I've had three phone conversations with them in which they refused to even consider the idea of taking me off their return, and which included the ominous phrase that it's "only fair and equitable" for them to claim me, which leads me to suspect that they'll fight me tooth-and-nail on this (my stepmother can get a bit...dedicated, when she thinks she's entitled to something.) They also seemed to imply that they are required to claim me as a dependent, which seems really dubious to me, but IANAA. Related information: they file through an accountant, which might be part of why they seem convinced that there's no option now but to claim me. I feel like it probably wouldn't be kosher to try to contact her directly, but I don't know.
As far as I see it, I have four options:
1. Try to appeal to the school for a second year of non-resident tuition waiver. They've expressed in the past that they will consider granting these under exceptional circumstances, when you've made a good-faith effort to establish residency requirements and have been unable to for reasons beyond your control. I have no idea if this would qualify in their eyes (I am unusually young for a grad student and really was living with/dependent on my parents full-time up til August, which I hope might sway them?)
2. Continue trying to convince my parents to amend their return.
3. File as an independent anyway, and deal with the fallout from my parents and the IRS.
4. Start looking for a way to afford the additional $22,000 dollars of tuition for next year.
I'm sorry this is kind of an incoherent mess, but I'm a bit of a wreck right now, because I've spent most of my afternoon trying to deal with this, and all of those options seem insurmountable and I hate confrontation and aaaaaagh. Any advice on what I can do to try to make any of these less difficult and more successful would be so, so appreciated. If I missed anything, throwaway email is askmetaxbaby@gmail.com.
I've had three phone conversations with them in which they refused to even consider the idea of taking me off their return, and which included the ominous phrase that it's "only fair and equitable" for them to claim me, which leads me to suspect that they'll fight me tooth-and-nail on this (my stepmother can get a bit...dedicated, when she thinks she's entitled to something.) They also seemed to imply that they are required to claim me as a dependent, which seems really dubious to me, but IANAA. Related information: they file through an accountant, which might be part of why they seem convinced that there's no option now but to claim me. I feel like it probably wouldn't be kosher to try to contact her directly, but I don't know.
As far as I see it, I have four options:
1. Try to appeal to the school for a second year of non-resident tuition waiver. They've expressed in the past that they will consider granting these under exceptional circumstances, when you've made a good-faith effort to establish residency requirements and have been unable to for reasons beyond your control. I have no idea if this would qualify in their eyes (I am unusually young for a grad student and really was living with/dependent on my parents full-time up til August, which I hope might sway them?)
2. Continue trying to convince my parents to amend their return.
3. File as an independent anyway, and deal with the fallout from my parents and the IRS.
4. Start looking for a way to afford the additional $22,000 dollars of tuition for next year.
I'm sorry this is kind of an incoherent mess, but I'm a bit of a wreck right now, because I've spent most of my afternoon trying to deal with this, and all of those options seem insurmountable and I hate confrontation and aaaaaagh. Any advice on what I can do to try to make any of these less difficult and more successful would be so, so appreciated. If I missed anything, throwaway email is askmetaxbaby@gmail.com.
I'm not a tax attorney, but I did have to do this with my parents though they claimed me by accident for the first year after I moved out. I didn't know they had claimed me when I did my taxes. If you don't meet the requirements for being a legal dependent of someone else (that R343L linked to), file your taxes and claim yourself. At that point the IRS will complain at both of you and you will be able to demonstrate that you are your own dependent (lease, separate bank statement, etc). Your parents will then be required to file a 1040X amended return deleting you. If they fail to file the amended return they'll be audited and the IRS will "fix the glitch."
posted by fireoyster at 5:39 PM on February 21, 2011 [5 favorites]
posted by fireoyster at 5:39 PM on February 21, 2011 [5 favorites]
If you were a dependent until August, that was the majority of the year. They do have the moral upper hand here.
posted by k8t at 5:39 PM on February 21, 2011
posted by k8t at 5:39 PM on February 21, 2011
Are your parents helping you out at all with tuition? Would there be an argument for you in that what their contribution in tuition if you are a non-resident is going to outstrip whatever tax benefits they get in claiming you as a dependent?
Are you on their health insurance? Some policies require parents to claim their adult children as dependents to still qualify for the family plan, so perhaps that is where the "have to" comes from.
As to option 3, I don't know what the fallout would be with your parents, but there are few things that are going to trigger an audit faster than dueling dependent claims and as stressful as this is right now, an audit is probably not going to be better by a long shot and comes with potential financial liabilities in terms of back taxes and penalties owed if the audit doesn't go your way.
They might not be equipped to handle this, but if you can't afford a lawyer, maybe going into a tax preparer like H&R Block could help you better figure out what your filing options are? They'd at least be more well-versed in the tax code and I assume would be cheaper than an attorney.
In the meantime, talking to your school about your issue at least to get a sense of your options without formally making the request (is there a financial aid officer or similar with whom you could meet?) would probably give you a better sense of how you should proceed since they are in the best position to answer whether or not this is something that would meet the extraordinary circumstances requirements, and they may even be willing to work with you. Good luck!
posted by HonoriaGlossop at 5:43 PM on February 21, 2011 [1 favorite]
Are you on their health insurance? Some policies require parents to claim their adult children as dependents to still qualify for the family plan, so perhaps that is where the "have to" comes from.
As to option 3, I don't know what the fallout would be with your parents, but there are few things that are going to trigger an audit faster than dueling dependent claims and as stressful as this is right now, an audit is probably not going to be better by a long shot and comes with potential financial liabilities in terms of back taxes and penalties owed if the audit doesn't go your way.
They might not be equipped to handle this, but if you can't afford a lawyer, maybe going into a tax preparer like H&R Block could help you better figure out what your filing options are? They'd at least be more well-versed in the tax code and I assume would be cheaper than an attorney.
In the meantime, talking to your school about your issue at least to get a sense of your options without formally making the request (is there a financial aid officer or similar with whom you could meet?) would probably give you a better sense of how you should proceed since they are in the best position to answer whether or not this is something that would meet the extraordinary circumstances requirements, and they may even be willing to work with you. Good luck!
posted by HonoriaGlossop at 5:43 PM on February 21, 2011 [1 favorite]
You can file your own tax return even if you are claimed as a dependent on their tax return; you just can't claim your personal exemption on your tax return.
If you were, indeed, their dependent, the IRS wants them to claim you as such. Also, all the other potential issues mentioned already.
posted by Sidhedevil at 6:19 PM on February 21, 2011
If you were, indeed, their dependent, the IRS wants them to claim you as such. Also, all the other potential issues mentioned already.
posted by Sidhedevil at 6:19 PM on February 21, 2011
I am not an accountant, but I have been a university administrator, and my understanding is that the IRS is fine with dependents filing separate tax returns, as long as the personal exemption is only claimed once. Read Publication 501 for more info; they hypothesize several scenarios in which dependents file separate tax returns.
posted by Sidhedevil at 6:21 PM on February 21, 2011
posted by Sidhedevil at 6:21 PM on February 21, 2011
Oh, honey. Don't worry! You're fine! You can still file your own taxes - you just can't claim the personal exemption. Your parents are taking your exemption (as they probably should, assuming you truly were dependent on them for most of the year). But you can (and actually may be required to!) still file your own taxes, assuming you earned some kind of income last year. You may end up owing some tax (since you can't take the exemption) but hey, I'm sure it's a lot less than $22K.
In addition, you're in a new state, right? If you earned any income in the new state, you'll be filing state taxes in this state; your parents won't. So you'll have that as proof as well.
Check out IRS publication 501. The table on Page 4 will tell you if you're required to file your own taxes and Page 10 has the information on whether your parents can legally claim you.
Also check out publication 929 to learn more about filing taxes as a dependent.
Lastly, I always advise people this: call the IRS with your questions! They're very friendly and knowledgeable and will be happy to help. Calling them will not trigger an audit; they don't ask you for any personal info. You can ask them whatever you want.
posted by yawper at 6:24 PM on February 21, 2011 [9 favorites]
In addition, you're in a new state, right? If you earned any income in the new state, you'll be filing state taxes in this state; your parents won't. So you'll have that as proof as well.
Check out IRS publication 501. The table on Page 4 will tell you if you're required to file your own taxes and Page 10 has the information on whether your parents can legally claim you.
Also check out publication 929 to learn more about filing taxes as a dependent.
Lastly, I always advise people this: call the IRS with your questions! They're very friendly and knowledgeable and will be happy to help. Calling them will not trigger an audit; they don't ask you for any personal info. You can ask them whatever you want.
posted by yawper at 6:24 PM on February 21, 2011 [9 favorites]
As to option 3, I don't know what the fallout would be with your parents, but there are few things that are going to trigger an audit faster than dueling dependent claims and as stressful as this is right now, an audit is probably not going to be better by a long shot and comes with potential financial liabilities in terms of back taxes and penalties owed if the audit doesn't go your way.
Which it wouldn't, if the OP really was financially dependent on the parents (living with them through August, frex).
I would really just go ahead and file a tax return as a resident of $New State and not claim my personal exemption if I were the OP, because the parents have already claimed that (and it seems well within their rights to do so).
posted by Sidhedevil at 6:24 PM on February 21, 2011
Which it wouldn't, if the OP really was financially dependent on the parents (living with them through August, frex).
I would really just go ahead and file a tax return as a resident of $New State and not claim my personal exemption if I were the OP, because the parents have already claimed that (and it seems well within their rights to do so).
posted by Sidhedevil at 6:24 PM on February 21, 2011
Oops...should have previewed! Sidhedevil beat me to it :)
posted by yawper at 6:25 PM on February 21, 2011
posted by yawper at 6:25 PM on February 21, 2011
Check out Form 1040ez. There is a box that you can check to indicate that you could be claimed as a dependent on someone else's return. If you do that, then you will not get to use the personal deduction and all should be good with the IRS. You will need to claim and pay taxes on all of your income - wages, dividends etc. You would then file the matching state form and pay state taxes on the same income. (your parents, if they included your income, would have paid taxes for their state, not your new one) The state tax is probably the magic form - proof that you paid taxes in the your new state of residency. That should give you the paperwork the school is asking for.
Note that the IRS form does not ask IF someone else claimed you but if they COULD claim, which is obviously true no matter how they fill out their form.
So, if it turns out that you needed to be a nondependent last year in order to have residency in-state then you have a problem. If you just need to file taxes as a state resident then you should be fine. Since you aren't allowed to take a personal deduction, this will not cause any problems for your parents. In fact, if they did pay takes on your income, they may be able to get a refund for the amount that is being double paid.
posted by metahawk at 6:28 PM on February 21, 2011 [2 favorites]
Note that the IRS form does not ask IF someone else claimed you but if they COULD claim, which is obviously true no matter how they fill out their form.
So, if it turns out that you needed to be a nondependent last year in order to have residency in-state then you have a problem. If you just need to file taxes as a state resident then you should be fine. Since you aren't allowed to take a personal deduction, this will not cause any problems for your parents. In fact, if they did pay takes on your income, they may be able to get a refund for the amount that is being double paid.
posted by metahawk at 6:28 PM on February 21, 2011 [2 favorites]
It's not quite clear from the question whether it's filing taxes in your new state or filing taxes as a non-dependent that's critical for establishing residency. Filing taxes shouldn't be a problem, but it does sound like you can't legitimately claim you weren't a dependent last year.
Are you sure that's a problem, though? For example, at UCLA, you can establish residency (even if you're a dependent) if you're 24 or have a TAship.
posted by synchronia at 6:41 PM on February 21, 2011
Are you sure that's a problem, though? For example, at UCLA, you can establish residency (even if you're a dependent) if you're 24 or have a TAship.
posted by synchronia at 6:41 PM on February 21, 2011
I've been filing taxes on my own since I was 16 ish, though I was claimed as a dependent until age 23. I just checked the box, as noted by metahawk. FYI, I was claimed as a dependent the year I graduated from college, and the same situation applied for my grad school residency requirements.
They were more concerned with my school sponsored field research over the next summer (20 pages of additional documentation...) than they were about the taxes (not concerned at all)
posted by rockindata at 6:44 PM on February 21, 2011
They were more concerned with my school sponsored field research over the next summer (20 pages of additional documentation...) than they were about the taxes (not concerned at all)
posted by rockindata at 6:44 PM on February 21, 2011
Nobody is *required* to claim someone as a dependent. They are only required to prove that someone they are claiming IS a dependent.
Two things must happen: only one exemption per person, and all income must get reported somewhere.
So, if they are entitled to the exemption, just file your taxes without it. Perfectly normal.
Note: run the numbers. When I was a youth, there was one year where it worked out better for my dad to NOT claim me as a dependent and for me to take the exemption, and I just gave him the difference.
posted by gjc at 8:01 PM on February 21, 2011
Two things must happen: only one exemption per person, and all income must get reported somewhere.
So, if they are entitled to the exemption, just file your taxes without it. Perfectly normal.
Note: run the numbers. When I was a youth, there was one year where it worked out better for my dad to NOT claim me as a dependent and for me to take the exemption, and I just gave him the difference.
posted by gjc at 8:01 PM on February 21, 2011
Mod note: From the OP:
Sorry, I should've been more clear in the original post. Synchronia has it: the requirement, as listed, is filing a federal return as an independent resident of the state (or being listed as a dependent on the federal form of a resident of the state), not filing state income tax (in fact, this state doesn't have an income tax.)posted by jessamyn (staff) at 8:50 PM on February 21, 2011
I totally agree that it's justified for them to file with me as a dependent. I just would like to find a solution where that doesn't mean I'll get saddled with over $20k additional in tuition costs (which they do not help me with; by mutual agreement, school costs have always been my responsibility.) I have no issue with them getting the exemption money. In fact, I was already planning on doing what the young rope rider suggested and giving them some money to make up for what they may have been expecting on the rebate. Unfortunately, the conversation didn't get to that point, because they were already insisting that they couldn't file without me listed as a dependent.
I was under the impression that even if a person is eligible to be claimed as a dependent, they may still choose to file as an independent (provided no one claims them as a dependent), but it sounds like that may not be the case. If it's actually impossible for me to file as an independent, that may (hopefully?) be enough to convince the graduate school to grant me an exemption. Thanks for your responses.
If your $20K tuition is less than what they would have to pay if they didn't claim you, then you might offer to pay them back. There's still some rigamarole that they would have to go through (filing the amended return) and you could even throw a premium on top for that. At the very least, offering to do so will drive home to them how very much money it will cost *you* for them to file this way. And, if they agree to this, at least your debt is less, and not to the government.
posted by Made of Star Stuff at 9:16 PM on February 21, 2011 [1 favorite]
posted by Made of Star Stuff at 9:16 PM on February 21, 2011 [1 favorite]
One of the requirements for you to qualify as their dependent is the support test: you must not have provided more than half of your own financial support for the year.
I'm guessing that you received student loans for the Aug-Dec period when you were in school, and that they accounted for a significant percentage of your total expenses for the year. Money that you borrowed does count as self-provided support, so I bet if you add it all up (see Worksheet 1 in Publication 501), you'll find that you weren't their dependent.
If you're near the 50% line, then it might be time to try coming to an arrangement with your parents.. some of the numbers can be fuzzy, such as the fair rental value of your room in their house.
posted by Sxyzzx at 11:41 PM on February 21, 2011
I'm guessing that you received student loans for the Aug-Dec period when you were in school, and that they accounted for a significant percentage of your total expenses for the year. Money that you borrowed does count as self-provided support, so I bet if you add it all up (see Worksheet 1 in Publication 501), you'll find that you weren't their dependent.
If you're near the 50% line, then it might be time to try coming to an arrangement with your parents.. some of the numbers can be fuzzy, such as the fair rental value of your room in their house.
posted by Sxyzzx at 11:41 PM on February 21, 2011
If they helped you with tuition and you lived with them until August I'd say you were their dependent whether you like it or not. And to go along with that: feel lucky, not everyone has parents who can/will help them out in any financial way.
I'd talk to your school about it and see if they'll wave it for this year, assuming that next year you'll be "on your own"
posted by zombieApoc at 6:35 AM on February 22, 2011
I'd talk to your school about it and see if they'll wave it for this year, assuming that next year you'll be "on your own"
posted by zombieApoc at 6:35 AM on February 22, 2011
Assuming that you do in fact meet the legal requirements to be considered a dependent...
Dependents & Exemptions (IRS.gov)
Question: If I claim my daughter as a dependent because she is a full-time college student, can she claim herself as a dependent when she files her return?
Answer: If you claim your daughter as a dependent on your income tax return, she cannot claim herself on her income tax return.
-- If an individual is filing his or her own tax return, and the individual can be claimed as a dependent on someone else's return, the individual cannot claim his or her own personal exemption.
-- In this case, your daughter should check the box on her return indicating that someone else can claim her as a dependent.
Additional Information: Publication 501, Exemptions, Standard Deduction, and Filing Information
posted by EmilyClimbs at 9:49 AM on February 22, 2011
Dependents & Exemptions (IRS.gov)
Question: If I claim my daughter as a dependent because she is a full-time college student, can she claim herself as a dependent when she files her return?
Answer: If you claim your daughter as a dependent on your income tax return, she cannot claim herself on her income tax return.
-- If an individual is filing his or her own tax return, and the individual can be claimed as a dependent on someone else's return, the individual cannot claim his or her own personal exemption.
-- In this case, your daughter should check the box on her return indicating that someone else can claim her as a dependent.
Additional Information: Publication 501, Exemptions, Standard Deduction, and Filing Information
posted by EmilyClimbs at 9:49 AM on February 22, 2011
I got into this same fight with my dad the year I moved to college. I didn't need any residency requirements, but I was going to get a lot more money back from my taxes if I filed independently.
Have you been paying your way at all at your parents house? I argued that even though I had been living with him for 8 months, my income had been contributing to the household bills. Once I moved out I was completely paying my own way. Therefore, I was over that 50% threshold.
He said fine, but went ahead and claimed me as a dependent anyway. I believe he was hoping the IRS wouldn't notice. They did and after that I went through the same process as fireoyster. Ultimately my dad had to amend his return.
posted by ephemerista at 1:55 PM on February 22, 2011
Have you been paying your way at all at your parents house? I argued that even though I had been living with him for 8 months, my income had been contributing to the household bills. Once I moved out I was completely paying my own way. Therefore, I was over that 50% threshold.
He said fine, but went ahead and claimed me as a dependent anyway. I believe he was hoping the IRS wouldn't notice. They did and after that I went through the same process as fireoyster. Ultimately my dad had to amend his return.
posted by ephemerista at 1:55 PM on February 22, 2011
You hate confrontation. Don't do what ephemerista/fireoyster are suggesting (your alternative #3), which gets the IRS involved. The best possible outcome will be your parents being furious with you. If you're going a more confrontational route, I would start by contacting the accountant, explaining your situation, and asking approximately how much extra it would cost your parents to not claim you.
You said you were going to offer to pay them back, but you didn't get to that point in the conversation. Is there any way you can talk to them and start with the financial point -- that you can't afford an extra $22K for tuition but will pay them back for tax preparation and the difference in the taxes they're paying? Could you start by appealing to your dad, for instance, since you said your stepmother won't back down? Could you tell them that you understand and agree that they are entitled to claim you as a dependent, but they would be doing you a huge favor by not doing so and you would make it up to them financially?
Just trying to think of different strategies for approaching them, rather than different strategies for filing your taxes -- it seems clear that you can't just file as an independent without government intervention, and you seem certain that your school will take this seriously and not make an exception. (Have you tried calling the financial aid office, just in case?)
Good luck!
posted by chickenmagazine at 7:08 PM on February 22, 2011
You said you were going to offer to pay them back, but you didn't get to that point in the conversation. Is there any way you can talk to them and start with the financial point -- that you can't afford an extra $22K for tuition but will pay them back for tax preparation and the difference in the taxes they're paying? Could you start by appealing to your dad, for instance, since you said your stepmother won't back down? Could you tell them that you understand and agree that they are entitled to claim you as a dependent, but they would be doing you a huge favor by not doing so and you would make it up to them financially?
Just trying to think of different strategies for approaching them, rather than different strategies for filing your taxes -- it seems clear that you can't just file as an independent without government intervention, and you seem certain that your school will take this seriously and not make an exception. (Have you tried calling the financial aid office, just in case?)
Good luck!
posted by chickenmagazine at 7:08 PM on February 22, 2011
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posted by R343L at 5:29 PM on February 21, 2011 [4 favorites]