Is this 17 y/o a dependent?

Technical topics regarding tax preparation.
#1
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17 year old kid broke into the music business in 2020 and made $90,000 $50,000. He lives with his mom who paid all the housing bills but only made $30,000. They would pay less in tax as a family if he was not her dependent but she's determined to claim him.
Does she fail the support test?
 

#2
sjrcpa  
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What did he do with his $50K?
 

#3
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Mom said he spent it at Taco Bell.
 

#4
sjrcpa  
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Then he spent it on his support.
 

#5
CathysTaxes  
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She can't claim him. She should probably start charging him rent.
Cathy
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#6
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How much tax did he have to pay vs his mom? He might have had a 40% effective rate with SE tax....
 

#7
HowardS  
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$50K at Taco Bell? I hope mom hasn't got a septic system. :shock:
Retired, no salvage value.
 

#8
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HenryDavid wrote:How much tax did he have to pay vs his mom? He might have had a 40% effective rate with SE tax....



I'm not sure where you're going with that.

If he's Mom's dependent, she saves $1,000 but it cost him the $1,800 in stimulus.
 

#9
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So Mom gets to include this kid for EIC calc even though he's not a dependent? Wow!
 

#10
mariaku  
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You better have it all documented - that he actually spent this $$ on self-support. Not every expense is self-support. And if he supported himself, why are you getting "his support" info from mom?
 

#11
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Had he just been throwing tacos in the air as part of a publicity stunt wouldn't that still count in supporting his lifestyle?
 

#12
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I don't know but those tacos were deducted on his Sch C.

Mom brought me her return in mid-Feb and said the son didn't make any money in 2021 and that she wants to claim him. When she picked up her return she dropped off her son's stuff and he made $75K making music. WTH?
 

#13
sjrcpa  
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Guess he didn't tell Mom.
 

#14
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Under the "old" pre-Trump tax reform we were concerned about proving a child was a dependent. Now it seems we struggle to prove that the child is not a dependent. I suspect that a 17 year old with a $75,000 income is spending more on his/her support that his/her moderate income parent.
 

#15
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I knew a 17 year old who was making over a million. Mom and dad were her employees. She lived with mom and dad. The parents paid the bills with their money. They controlled daughters money as officers of her corp and the daughters salary went to brokerage account. She remained a dependent until she graduated high school, bought a $90k car and a $1+ million home. The parents still cover her on their health insurance. Gotta love young success.
 

#16
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CantonCPA wrote:I knew a 17 year old who was making over a million. Mom and dad were her employees. She lived with mom and dad. The parents paid the bills with their money. They controlled daughters money as officers of her corp and the daughters salary went to brokerage account. She remained a dependent until she graduated high school, bought a $90k car and a $1+ million home. The parents still cover her on their health insurance. Gotta love young success.


I would assume that whole arrangement was because minors don't have capacity to contract.

Youtube star?
 

#17
Jake  
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Facts: 99 year old mother living with daughter. There is no way she could live alone - would have to be in assisted living and probably in a nursing home if not for her daughter. If the mother used all of her income (a modest $20,000 or so) for her own support the daughter filing as Head of Household might be a close call via the 50+% criteria. But the mother does not spend more than $10,000 on her support. The daughter's home is paid for, has a value of approx. $375,000. Th daughter's income is about $95,000. Real estate taxes, insurance, utilities, maintenance and repairs are probably $10,000 a year. But there is also a value to the mother in living there rent free. How do you calculate the value of such housing to the mother in terms of "support"? I am leaning toward taking H of H status and let IRS question it and worry about the details if and when. No hurry - filing an extension on this one.
 

#18
CathysTaxes  
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If you follow the support worksheet, FMV rent if the home is used in the calculation.
Cathy
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