income tax questions

[Tennessee Dad]

First of all, thank you for all your information and advice to me and others.

Background:  Ex- and I divorced in 1996, and she had custody of our youngest daughter, who turned 18 in August.  Daughter is now in college.  Mom had custody (on paper), but daughter had lived with me and my wife for past 4 years (since May, 2002).  We had alternated claiming as a dependent on taxes, although I had paid the majority of her expenses for this time (just didn't want the fight).  I think it is only fair to claim daughter this year; she had lived with us the entire year, and we had paid her living expenses, a car repair bill of $1,000, plus my wife's job provided tuition assistance of over $2,000.   But, ex- says no, it's her year to claim.  

Next, daughter has scholarships and tuition assistance to pay her college expenses quite a bit above her "qualified" expenses.  If I understand correctly, she will have to pay taxes on the amount over the "qualified" expenses.  She has earned income of about $800 that she will have to report also.  

Questions:

1.  Should I legally claim daughter as a dependent on my return?

2.  Does daughter need to file her own return based on earned income and the amount of scholarships over her "qualified" expenses?

Thanks, again, for all your help!

[socrateaser]

This particular IRS reg is really convoluted, and a correct answer depends on a number of factors. Scan a copy of your court orders re college/adult child support and send it to [email protected].

Also send me the contents of your original post. I may have other questions.

After you do all this, leave a post here that I have mail, because I won't check that email otherwise. Thanks.

[Tennessee Dad]

Appreciate your offer to help, but our orders didn't address anything beyond when the child turned 18.  So, at this point, I guess we're on our on.  I think she meets the dependency exemption test according to IRS, i.e., birth child, full time-student, lived with me the full year except for college absences, provide more than half her support, not filing joint with another person.  I just feel ex- is trying to take advantage of the situation.  

Or, is the convoluted part regarding the scholarship income; that seems real confusing!

[socrateaser]

>Appreciate your offer to help, but our orders didn't address
>anything beyond when the child turned 18.  So, at this point,
>I guess we're on our on.  I think she meets the dependency
>exemption test according to IRS, i.e., birth child, full
>time-student, lived with me the full year except for college
>absences, provide more than half her support, not filing joint
>with another person.  I just feel ex- is trying to take
>advantage of the situation.  
>
>Or, is the convoluted part regarding the scholarship income;
>that seems real confusing!

If there's no order involved, then follow the IRS regs.

[mistoffolees]

>Or, is the convoluted part regarding the scholarship income;
>that seems real confusing!
>


ROTFL. I can empathize. Graduate degree and I run a multimillion dollar manufacturing company - but I STILL can't make sense of the way the IRS handles scholarships. I managed the taxes with stock options, all sorts of dividends and interest income, and small business finances, but had to call in an accountant for the scholarship piece.

Good luck.