$50k in income as student. Should I be "dependent" on taxes?

[Oh Dang!]

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I made $50k this year in salary and bonuses (at a pretty great summer internship and job offer signing bonus).

My parents make about $150k. My scholarship pays for rent, tuition, and a lot of meals. But my parents pay car insurance, etc. Sooo by the definition i could really be classified as dependent or independent....

Should my parents still claim me as a dependent? Or should I file as my own?

Basically, I'm curious if what I'll gain in tax credits by filing independent will be be much greater than the tax credits my parents would lose. Because if that's the case, we'd do it.

Ultimately, in March, I'll have our tax guy handle this. But I'm curious what y'all think...

 

[The White Coat Investor]

I made $50k this year in salary and bonuses (at a pretty great summer internship and job offer signing bonus).

My parents make about $150k. My scholarship pays for rent, tuition, and a lot of meals. But my parents pay car insurance, etc. Sooo by the definition i could really be classified as dependent or independent....

Should my parents still claim me as a dependent? Or should I file as my own?

Basically, I'm curious if what I'll gain in tax credits by filing independent will be be much greater than the tax credits my parents would lose. Because if that's the case, we'd do it.

Ultimately, in March, I'll have our tax guy handle this. But I'm curious what y'all think...

First, are you young enough that you can be claimed as a dependent? If not, then none of this matters.

Second, run the taxes both ways, then whichever results in the lower total tax bill (yours plus your parents) do that. It might be better for YOU if you file on your own, but better overall if you don't. Perhaps if that is the case your parents will pay you the difference.

I'm not going to do your hypothetical taxes (it's actually pretty easy to do), but I would bet the total tax bill will be lower with you independent on $50K of income.

 

[TexasPhysician]

First, are you young enough that you can be claimed as a dependent? If not, then none of this matters.

Second, run the taxes both ways, then whichever results in the lower total tax bill (yours plus your parents) do that. It might be better for YOU if you file on your own, but better overall if you don't. Perhaps if that is the case your parents will pay you the difference.

I'm not going to do your hypothetical taxes (it's actually pretty easy to do), but I would bet the total tax bill will be lower with you independent on $50K of income.

I agree with this. It's likely better for you to file independently, but without every number, I can't guarantee that.

 

[dpmd]

I would have to dig back through the publication at IRS.gov about filing, but I am pretty sure that it gives concrete situations in which a person is considered dependent versus independent and it isn't something you just get to choose. The best answer will come from checking out IRS.gov to be certain.