This article is the ninth of ten tips for reducing taxes during the summer.
Tip 9: Supporting a Recent College Graduate
Has your child recently graduated from college? This is probably the last year you can claim a dependency exemption. However, you must provide more than half of the child’s annual support to qualify for the $4,050 exemption.
To clear the half-support threshold, consider giving the graduate a generous graduation gift, such as a car to be used on the first job. Doing so will provide your child with a practical gift, as well as possibly helping you clear the support threshold required to claim a dependency exemption. Unfortunately, dependency exemptions may be reduced for high-income taxpayers. Consult a tax professional about this tax issue before purchasing a major graduation gift. It could impact the amount you are willing to spend.