credit cards

[pingpong]

Will using your parent's credit card affect one's credit rating? Also, does using your parent's credit card make you a dependent? The reason I'm asking is because I wanted to gain residency in Ohio and in order to gain residency, one of the stipulations is that you must be independent from your parents.

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[mpp]

Typically financial independence would remove someone from IRS dependent status. That is to say, for you to declare someone a dependent, you must supply them with half of their financial support.

Therefore, if you receive half (or more) of the money you need to live (including credit card expenditures) then you are a dependent of your parents, cannot claim independent status, and cannot take the personal exemption.

If you want to claim 'independent status' be sure that your parents are no still claiming you as a dependent. Sometimes parents are reluctant to do this since they like the deduction they receive from claiming you as a dependent.

 

[mpp]

By the way, this is one of the more common mistakes in income tax filings: the parents claim the child as a dependent (when they are 18 or 19 years old and working and earning money) and the child fills out a tax return and claims the personal exemption.

 

[pingpong]

My parent's won't be supplying half my living expense (too bad!) I just have the card for emergencies only.

 

[Cobragirl]

To answer your original question...NO...using your parents credit cards will not affect your credit rating, unless you are a co-signer on the card. A co-signer is different than an "authorized user". A co-signer can be held accountable financially and legally for the debt incurred on a card, an authorized user can not. More than likely, you are just an authorized user and your parents are co-signers for each other. Also, using your parent's credit card does NOT make you a dependent (no more than you using MY credit card would make you MY dependent). The only thing that makes you "dependent" is your age, and whether your parents claim you on their tax returns (sometimes parents do this even if they DON'T provide more than half of the child's income...but that's another issue..)

As far as Ohio's residency issues, you should just call the DMV (or whatever office handles that stuff up there) and ASK THEM what they mean by "independent from parents". It may just mean you live away from home...or they may go by the IRS standards. You'll have to make your decisions on what to do then.

Hope this helps

 

[Badgerbabe]

You are very right about parents liking the deduction. I have been financially independent of my parents for over three years and this year was the first that I absolutely insisted that they not claim me.

 

[pingpong]

Thanks...everything makes more sense now!

 

[CoffeeCat]

Originally posted by Badgerbabe
You are very right about parents liking the deduction. I have been financially independent of my parents for over three years and this year was the first that I absolutely insisted that they not claim me.

I agree! I was wondering why they always were so nice about doing my taxes each year! Just wait until they try next year and see that 1/4 of my income wasn't taxed...hehehe.