On Apr 10, 2:44*am, Wally D <wallyd...[at]gmail.com> wrote:
- quote -

Your son is your dependent unless he provided over 1/2 his own
support.

The loan proceeds are his money, not yours. The amounts expended on
his costs are support he provided for himself.

The scholarship is not support provided by either you or your son. The
portion of tuition paid by the scholorship are not costs that anyone
paid for computing support. Since the scholarship was $5,000 his total
expenses are reduced by $5,000. If he paid over 1/2 of what's left, he
cannot be claimed as your dependent.

You state that you paid $11,000 out of $36,000 total costs. He paid
the rest. He paid over 50% of his own support.

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"Paul Thomas, CPA" <paulthomascp...[at]bellsouth.net> wrote:
- quote -

Aside for the archives: Air Force Academy cadets currently receive a
monthly salary of about $700 a month in addition to tuition, room, and
board. They are supposed to pay for uniforms and some other things
from this.
I see that http://www.academyadmissions.com/intro/faq/#gen11 says each
cadet must file federal and state income tax returns.
Is there a citation that further addresses the taxes here? ISTM the
tax numbers--for both parents and student--ought to be run and the
parents should discuss the situation with the Academy student.

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On Apr 10, 7:49*am, "Paul Thomas, CPA" <paulthomascp...[at]bellsouth.netwrote:
- quote -

Thanks, Paul, for your answers but why do you say that the loan not a
factor? Because it’s a loan? Because it’s a student loan? Because I
cosigned for the loan? I’m confused because Pub 501 page 17 says
under the Tax-exempt income heading: “In figuring a person’s total
support, include tax-exempt income, savings, and borrowed amounts used
to support that person.” It then goes on to give Example 2, where a
student takes out a student loan of $2500 and uses it to pay her
college tuition and says that “She is personally responsible for the
loan”. The conclusion in the example is that “You (her relative)
cannot claim an exemption for her because you provide less than half
of her support.”

In the example, the student loan is definitely a factor in figuring
the student’s total support. Which brings me back to my original
question: Who provides the support in the case of a cosigned loan?
My son and I are both personally responsible for the loan. I assume
that only one of us can say that he contributed the loan proceeds to
my son's total support, though. Can my son and I decide who it is
between us or does the IRS have a rule about this?

Thanks again


- quote -

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"Wally D" <wallydl76[at]gmail.com> wrote
- quote -



It means that, even if he was on a full ride to the Air Force Academy where
food, clothing/uniforms, books, room, and classes were paid for, and you
only supported him with a couple of hundred a month in walking around cash,
that he's still your dependent if he otherwise qualifies as your dependent.

The student loan, scholorships, etc are not a factor.






- quote -




Providing that no other person - like a mom or grandparent - does not
provide more support than you do, you get to claim your son as your
dependent.

The student loan is not a factor. You're looking too long at that issue and
have lost sight of the rest of it.




--
Paul Thomas, CPA
Watkinsville, Georgia

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Hi,

My son was a full-time college student during 2008 and was under the
age of 24 at the end of 2008.

His expenses for 2008 were $24000 for education expenses, $10000 for
rent and utilities, $4000 for food, and $3000 for miscellaneous
expenses for a total of $41000. He took out $20000 in private student
loans which I cosigned for, $3000 in federal student loans which I
didn’t cosign for, and earned $2000 from a part-time job for a total
of $25000. His college gave him a scholarship of $5000. I paid for
the remaining $11000 of his expenses.

I have two questions regarding his status as my dependent:

1. It says IRS Pub. 501 that a “scholarship received by a child who
is a full-time student is not taken into account in determining
whether the child provided more than half of his or her own support”.
What does this mean? Surely it must be accounted for in some
fashion. Should I subtract it from his education expenses? Would
that make his education expenses $19000 and his total expenses $36000?

2. Who is considered to be the support provider for the student loans
that I cosigned? Is it my son or myself? I’ve seen this question
answered both ways on other forums but I can’t find any specific
reference on the IRS web site or in any of their publications about
the subject of cosigned student loans and the support test.

The answer to question 2 is especially import as it will determine
whether I can claim my son as my dependent and therefore whether I can
claim an exemption for him for 2008 or not.

Can someone answer these questions and refer me to the appropriate IRS
documentation?

Thanks!
Wally D

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<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >