Student Dependent Deduction

Mar 08, 2016 1 Replies

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My wife and I file a joint IRS 1040 return. Our 32 year old daughter decided to change careers in late 2014. She gave up her good paying job and enrolled in a two year graduate school program. We have been supporting her with a stipend of about $3500 per month to cover her apartment, food, auto and other costs of living plus paying her tuition and medical insurance bills. She had no earned or investment income during all of 2015. My reading of the IRS regulations has me believing that my wife and I can take a $4,000 dependent deduction for her on our

2015 IRS return. Did I get this correct? And if the answer is yes, will there be a similar deduction of some amount available to use on our 2015 Massachusetts Income tax return?

(My apologies of the quoting is excessive)

Yes; if her income is less than $4,000, and you (and your wife) supply more than half of her "support", then you can claim her as a dependent on your Federal and MA return. The MA exemption is only $1,000, though. (If you supply more than half of her support, you can claim any medical expenses (including medical insurance) you pay for her as your own. This may or may not help you; I've read than only 10% of individual returns claim a medical deduction.)

I should "remind" you that, if you claim her as a dependent, the ACA penalties apply to you if she doesn't have qualifying medical insurance.

-- Arthur L. Rubin CRTP, AFSP in Brea, CA

Student Dependent Deduction

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