When you’re a parent, you always say that you’ll be a parent forever. But do you really mean it? Is there a point – an age or an event – at which you plan to look your kids in the eye and say, “Enough is enough, now you’re on your own”?
There certainly was at my house growing up. My parents had a rule: after high school, you either went to school, joined the military, or got a job and moved out. I went to school and my two brothers joined the Navy.
That was, however, a different time. Increasingly, parents and the courts are rethinking whether age 18 – high school graduation age for most kids — should be the benchmark for financial and other independence.
That question was highlighted again this week 18-year-old Rachel Canning went to court to force her parents to pay her support. Rachel, an 18-year-old senior at Morris Catholic High School, has asked a judge to order her parents, Sean and Elizabeth Canning to pay support, private school tuition, medical and related bills, college expenses, and legal fees. According to court papers, Rachel alleges that her parents “abandoned her in the middle of the school year.”
Rachel’s parents, Sean Canning, a retired police chief, and Elizabeth Canning, a legal secretary, tell a different story. They claim that the teen was out of control and refused to abide by the rules. Problems with their daughter, they said, could be linked to her boyfriend, who “apparently has no supervision, was given an out-of-school suspension and had access to a car.” According to her parents, Rachel and her boyfriend had been suspended from school for posting inappropriate messages on social media and for skipping class and was removed as captain of the cheerleading squad for her behavior. Additionally, her parents claimed that she stayed out too late drinking during the school week, coming it at least once at 3:00 a.m. She left her mother voice messages called “vulgar” and was, her parents say, otherwise disrespectful. Rachel was given an ultimatum: follow the rules or leave. She left.
Rachel ended up at the home of her best friend, Jaime. Her friend’s father, John Inglesino, has since been supporting Canning and has advanced legal fees for Canning’s lawsuit. This week, the Cannings alleged that, with Inglesino’s aid, a bad situation has been made worse. The Cannings claim that the Inglesinos have “enabled” Rachel rather than encouraging her to come home.
Legally, Rachel’s case will focus on whether she is considered “emancipated” — which for legal purposes, means that she is not dependent on her parents. Age 18 is generally considered the age of majority in the Garden State and lawyers for the Cannings claim that no matter the age, their daughter declared herself emancipated by leaving home. If Rachel is not considered emancipated, the next focus would be whether her parents have a legal obligation to pay for private school (tuition at her school runs $12,700 per year) and other expenses, including college. Earlier this week, the judge denied Rachel’s request for an emergency order to pay outstanding private school tuition and college tuition, finding that there was not yet an “emergency.”
As that case continues to make headlines, another case was decided in New Jersey this week, establishing that a Rutgers University history professor will have to pay a portion of his daughter’s education at Cornell Law School.
Factually, this case is a bit different for two reasons: the child involved in the matter was over the age of 18 and the parents were divorced. James Livingston divorced his now ex-wife, Patricia Rossi, in 2009. Just before the divorce, their daughter, “J” (not named in court documents) was legally an adult and had graduated from Rutgers University. As part of the divorce settlement, the parents agreed that they would each pay half of the daughter’s costs to attend law school. Around that time, Livingston’s daughter stopped speaking to him.
Three years later, “J” was accepted to Cornell Law School. The cost of tuition, books, and living expenses for school totaled $74,580 per year. Livingston offered to contribute $7,500 per year for “J” to attend Rutgers Law School where she could continue to live at home. “J” didn’t discuss her choice with her father and chose Cornell.
A lawsuit was raised to force Livingston to honor the provision in the divorce decree requiring that he pay half of the expenses. Livingston, of course, disagrees, saying that it was unfair for him to pay for school. He argued that “J” waited too long after his divorce — and her college graduation — to apply to law school and that they had agreed that she would start law school within a year or so after graduation. He also felt that he should have been involved in the decision-making process and that the fact that he had no communication with “J” should alleviate his obligation to pay for her continuing education. The court disagreed and ruled that Livingston had to pay his share, or just over $112,000.
The two cases raise interesting questions about the rights of children to be supported — and the rights of parents to set the rules. This issue of whether or not a child might be dependent on his or her parents also raises some interesting tax consequences.
Generally, to be considered a dependent for tax purposes, a person must be either your qualifying child or your qualifying relative.
The rules for a qualifying child are pretty straightforward. A person is your qualifying child if that person meets all of these tests:
- Relationship. The dependent must be your child, stepchild, adopted child, foster child, brother or sister, or a descendant of one of these.
- Residence. The dependent must have the same residence as you for at least half of the tax year.
- Age. The dependent must be:
- (a) under age 19 at the end of the year and younger than you (or your spouse if filing jointly)
- (b) under age 24 at the end of the year, a student, and younger than you (or your spouse if filing jointly), or
- (c) any age if permanently and totally disabled
- Support. The dependent must not have provided more than half of his or her own support during the tax year.
- Return. The dependent, if married, must not have filed a joint return with his or her spouse.
Most likely, “J” wouldn’t meet the criteria as a qualifying child for her father, even if he pays half of her expenses. She is likely not under the age of 24 (assuming she graduated from college on time in 2009) and she doesn’t live with her father (nor would she if she were not at law school).
Interestingly, Rachel might not meet the criteria either, depending on how long she remains out of her parents’ care. While she does meet most of the tests, she may not meet the residency test if she remains at her friend’s house. Who is paying her expenses for this purpose doesn’t matter so long as she’s not paying her own way: the support test for a qualifying child doesn’t require the parent to pay half of the support but rather requires that the child can’t pay more than half of their own support.
Caveats and exceptions do apply: for example, college students may still be considered dependents even if they live away from home. There are also exceptions for temporary absences such as children who were born or died during the year, children of divorced or separated parents or parents who live apart, and kidnapped children.
However, there is no clear exception for a child choosing to remove himself or herself from the home. If, however, a child is emancipated under state law, for tax purposes, the child is treated as not living with either parent and cannot be considered their dependent.
The rules for a qualifying relative are more circumstantial — and more interesting in this case. Generally, a person is your qualifying relative — even if they’re not related to you (I know that’s confusing) — if that person meets all of these tests:
- Residency OR Relationship. The dependent must live with you OR must be related to you.
- Limited Income. The dependent must not have $3,900 or more of gross (total) income.
- Support. You must provide more than half of the dependent’s total support for the year.
- No Other Claims. The dependent must not be your qualifying child nor the qualifying child of anyone else.
There are special rules for divorced or separated parents or parents who live apart. In Rachel’s case, however, her parents are still together. Rachel could meet the relationship test but her parents would likely fail the support test. In this instance, it would matter that her friend’s father is paying her expenses. Depending on how long she stays — and how much he pays — Rachel’s friend’s father might be able to claim her as a dependent. Interesting result, right?
It would be an even more interesting result if the judge agreed to Rachel’s petition and required her parents to pay her “support” (she asked for $650 per week for expenses) plus private school tuition, medical and related bills, college expenses, and legal fees — and allowed her to remain at her friend’s home. In that event, she likely wouldn’t qualify as a dependent for her parents or for her friend’s father.
And “J”? Since the facts indicated that she had been working between college and law school and due to her assumed age and her father will pay at least half the cost of her law school expenses, she likely doesn’t qualify as a dependent for her mother or her father.
What about those support payments? Any payments made to or for the support of the child — whether for Rachel or J — have no federal income tax consequences. Child support is tax neutral. That means that the cost of paying child support is neither deductible to the payor nor is it income to the payee.
And those education expenses? That’s where that dependency determination could come back to hurt both sets of parents. Generally, you can claim the tuition and fees deduction if:
- You pay qualified education expenses of higher education; and
- You pay the education expenses for an eligible student; and
- The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return.
No dependent exemption = no tuition and fees deduction. The same rules apply for education credits.
The Tax Code focuses on bright lines (dollar amounts and numbers of days) and not emotions — and these cases involve a lot of emotions. We all parent differently and when things turn out a little different than planned — because of alcohol or boyfriends or divorces or estrangements or whatever — it’s hard for us to separate what we think should be the result from what the law believes to be the result. It will be a lot easier for IRS than the judges to make a determination in these cases.
That said, I’d love to hear your take on these issues. What do you think: when should a child no longer be your dependent?