Is it better to be claimed as dependent or independent

As parents, you’ve optimized your tax return by taking advantage of all the credits and deductions you could, including claiming your children as dependents. Before the Tax Cuts and Jobs Act of 2017, you were able to claim $4,050 for yourself and each dependent. However, TCJA replaced individual dependent credits and raised the standard deduction. So, now your children are legal adults, and you’re probably wondering if you can still claim them, and if you can, what are the ramifications.

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Who qualifies as a tax dependent?

First, let’s define exactly who you can claim as a dependent. For a child, the dependent must be part of your family, and they also must live with you for half the tax year. Exceptions for this rule include those adult children attending school. Another criterion is they must not be able to provide financial support for themselves. The income limit to claim an adult dependent is $4,200. They can’t file a joint tax return with someone and must be a U.S. citizen, U.S. resident alien, U.S. national or a resident of Canada or Mexico. They must also pass the age test.

1. The child was 18 or younger at the end of the year you’re filing for or;
2. The child was 23 or younger at the end of the year you’re filing for. To be considered a student, the child must be a full-time student for at least five calendar months of the filing year or;
3. The child is permanently and totally disabled.

Sound like your kid? You’re in luck. You can still claim them as a dependent. But should you?

Pros for claiming your adult kids

Once your child reaches the age of 17, you can no longer take advantage of the child tax credit, but you may still be able to take the $500 credit for other dependents. There are income phase outs for this credit though. The income threshold at which the credit begins to phase out has been increased to $200,000 or $400,000 if married filing joint.

If your child attends college, you may qualify for education credits which can help reduce your tax liability. You can only take one of the credits for the same student in the same tax year and there are income phase-outs for these credits as well.

The American Opportunity Tax Credit is a potential credit of up to $2,500, with up to $1,000 being refundable, per student. This credit is only for the first four years of post-secondary education expenses.

Lifetime Learning Credit is a potential credit of up to $2,000 per return, with no portion being refundable. This credit can be taken on any number of years for post-secondary education expenses.

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Cons for claiming your adult kids

If your kids are making $6,350 or more, they’re required to file a tax return. When you claim them as a dependent, they can’t take advantage of education credits. Both credits are subject to phase-outs after $80,000 for single filers and $160,000 for married filing jointly. If you’re ineligible, it’s possible your child isn’t and by claiming them, they lose the opportunity to take advantage of the credit.

Do the math

Like everything in life, the course you choose will be unique, depending on your family and individual needs. Work with your Henry+Horne advisor to ensure all your needs are met.

Danette Holguin, EA, Manager, specializes in the preparation and review of tax returns for individuals and trusts. You can reach her at  or (480) 839-4900.