A question and observation about tax code, "Does" vs "Can" (semi-legal)

[Soral]

My brother was filling out a W4 and just called me to ask for advice about dependents.

He made an interesting point to me that I have never heard before.

The part about others claiming you as a dependent, he didn't know what to fill out, because he just graduated college and is living at home...

That's unimportant.... what grabbed my attention was...


It doesn't say "does anyone claim you as a dependent" it says "CAN anyone claim you as a dependent"


Legally that is a HUGE difference....

thoughts?

[Statistical]

1. The simplest solution is for him to talk to his parent.

There are 5 conditions which must be met for a persons (his parents) to claim him as a dependent.
If they don't meet all 5 they can't and the answer to the question in the OP is "No".
If his parents (or any other person) meet all 5 criteria he should mark "Yes".

http://www.taxesindepth.com/info-tax-exemptions.html

So IF and ONLY IF all 5 conditions are met should he mark Yes, he doesn't claim himself and his parent claim him.

Now that being said the IRS doesn't really care unless TWO returns claim the same person. Tehcnically the reason the question is "CAN" if that if the 5 conditions apply he has no choice he must market "Yes", not claim himself and his parents claim him. That being said in the real world the IRS doesn't care. It would be far too complicated to verify each claim to make sure the right person is claimed on the right return. They just look to match that no person is claimed twice.

That being said. If he and his parents decide not to talk and they both claim him, 100% guaranteed he will be audited. When he is IF his parent "CAN" claim him, then they are right and he is in the wrong.

One last point. Almost always it is more beneficial for his parent to claim him. They likely have higher income and higher marginal tax rate so net-net there is a greater benefit in parents claiming him.

Simple answer:
1) He should talk to parents
2) Make sure both entities don't BOTH claim.
3) Make sure they don't NEITHER claim (leaves money on the table).
4) Almost always it is better for parents to take the exemption than the child.

[Soral]

4. I (kinda) get the code... I was talking about the wording. "Does" vs "Can" ....anyone "can"

[Statistical]

6. No not any one "Can".

Only those who meet the 5 point criteria "can".

"Can" doesn't mean "can" is in I "can illegally break the law", it means "can" as in "I can legally claim this person".

You "can" only legally claim another person on your return IF and ONLY IF you meet all five conditions
• citizenship
• support
• gross income
• joint return
• relationship

If his parents meet all 5 conditions listed on the link in my previous post then the answer to the "Can another person claim you" is yes. If they fail to meet even one of the five conditions then the answer is "No".

[elleng]

2. Info here; haven't read. Good luck.

http://taxes.about.com/od/dependents/Claiming_Dependents.htm

[PoliticAverse]

3. This has to do with whether you need to file a return or not. n/t.

[SoCalNative]

5. If he has already graduated then no.

A dependent must be under 19 at the end of the year you are claiming.

The IRS also lets you claim a dependents age 24 or under if they are enrolled in school full-time.

Since he has graduated, he is no longer "enrolled in school full time."

[truedelphi]

7. What he needs to do is this: ask anyone of his parents,

That is, mom, dad, or a step parent, if they are claiming him as a dependent.

The wording you cite is indeed weird - but what the IRS sees as its bottom line is if someone else is stepping forward and saying that their support for your brother is such that they claim him.

He can always call 800 829 1040 and ask there as well.

A lot of this is arbitrary - I could have claimed my son as a dependent his first year of college - but I didn't so that the money he made during the summer and that fall was considered his - and he got "his" refund.

By the time he was a sophomore, he made enough that he was on his own.

It gets very complicated when someone is in college and is on student grants and loans.

The IRS considers money offered to college students, such as grants, to be non-taxable if applying to books and tuition, but taxable if applying the money to dorm room fees etc.

One reason he left California - he got an education at an institution where he could be finished in four years, as opposed to California education.

Here in California the required classes are so booked up it takes many people five years to get through the system. And the money given as grants to California students has a high percentage point of it going to rent - whereas schools in many other parts of the country offer very cheap (comparatively) housing costs.