Son unable to claim himself as exemption

[Colonel_Buck]

My son graduated from Oregon State University (Go Beavs!) in June of 2014 with a degree in Math shortly after turning 22.

Looking at the rules for claiming full time students under the age of 24, it seems to me that my wife and I can claim him as a dependent on our joint return for tax year 2014. But we want him to claim himself as an exemption on his own return.

However, though, if you can claim someone as a dependent on your tax return, they are apparently not allowed to claim themselves as an exemption on their return, even if you don't claim them as a dependent on yours.

Am I reading the instructions accurately? If so, anyone know why this is?

[AndyK]

Correct.

Nobody can be an exemption twice.

Given that, the best way to approce it is to look at the financial impact.

Do the tax returns for both of you in two flavors: him exempting himself and you exempting him.

Look at the bottom line sums. Whichever of the two combinations comes up with the lowest total tax bill is the one to go with. (Note: total tax is NOT refund amounts -- it's a coule of lines above it.)

Now, to be a good daddy, you can compare the amounts and pay him what he lost by you claiming him. Since your and his incomes are probably grossly disparate, it will probably be best if you claim him -- higher tax rates and all that stuff.

And, the big bonus is that IT IS LEGAL.

[operabuff]

Actually, I think Col. Buck's point is that it's not legal. You can't claim a personal exemption for yourself if you can be claimed as an exemption on someone else's return, even if they don't actually claim you. (Section 151(d)(2)).

As a practical matter, I agree with your approach, Andy. I think many families in similar situations take that approach, particularly if it's a close call as to whether the parents provided more than half the support for their child. If the child has earned $6200 or less, the exemption is of no benefit to him.

So long as the exemption is claimed only once, it's unlikely that the IRS will care too much.

I think the law is written the way it is to provide certainty rather than flexibility.

Another wrinkle like this is in the individual mandate for the Affordable Care Act. You're on the hook for the penalty if anyone you can claim as a dependent does not have health insurance regardless of whether you actually claim them as a dependent.

[AndyK]

Another wrinkle like this is in the individual mandate for the Affordable Care Act. You're on the hook for the penalty if anyone you can claim as a dependent does not have health insurance regardless of whether you actually claim them as a dependent.

Ouch !!

Damn! You retire for a few years and they change all the rules on you.

[Famspear]

....You can't claim a personal exemption for yourself if you can be claimed as an exemption on someone else's return, even if they don't actually claim you. (Section 151(d)(2))....

I'm showing my age here, but I note that it was not always so. Under the original wording of the 1954 Internal Revenue Code, section 151 did not have any language disallowing the exemption amount to a taxpayer where the taxpayer could be claimed as a dependent by someone else. For this reason, if you read the instructions for Form 1040 for the tax years up through the year 1986, the instructions basically said that you could "always" claim yourself as a dependent.

Section 103(a) of the Tax Reform Act of 1986, Pub. L. No. 99-514, changed that beginning with the tax year 1987, by amending what was then subsection (f) of section 151 of the Code (renamed as the "1986" Code), to disallow the exemption amount to an individual who could be claimed as a dependent on someone else's return. As noted by operabuff, the disallowing language is currently found at Code section 151(d)(2).