I was doing my taxes this year had this question come up, should I declare my college student child as a dependent? Hoping a tax specialist or CPA is on the thread to answer. The usual answer is that it is always better for the parents to claim the child as dependent because the tax deduction is worth more to the parent who is presumably in a higher tax bracket than the child. But here's the dilemma for high income households: my income is too high (above $180k filing jointly) to qualify for any child tax credit or education credits or deductions, and my D has enough investment income from her college fund to have to file a tax return and to pay taxes. So the only tax benefit I get from declaring her a dependent is the $3950 tax exemption per child, and even that phases out at even higher incomes. Presumably, if I don't claim her as a dependent, she gets the education tax credit, no? So the question is, in this situation, is it better overall for the parent to claim a child as a dependent and get the minor deductions off income or is it better for the child be independent and thereby take tax credits to offset the child's investment income.
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