Best way to file dependent that received unemployment benefits so it won’t badly affect parents’ tax pay? What tax benefits are eligible if filed as dependent versus independent child?

Sorry to bother, but I am confused on how to file an 18 year old who has received unemployment up to around 31,600. I see some people say that a person is considered dependent no matter what the income is. However, I’ve seen some other posts say that a person can not be filed as dependent if they have too much unearned income from unemployment benefits.

How should I file an 18 year old under their married jointly parents? Would it be better to file them as independent or dependent?

Which would save more?
Taking into account possible EIC, EITC, American Opportunity Credits, tax deductions, tax exemptions, and other possible credits or benefits?

Their parents’ income is around AGI is around $41,200.
Also would using the look back provision be better to help the unemployment money from causing ineligibility for tax benefits?
2019’s income is slightly higher.
Would the look back rule apply in this case?

Someone said that filing an 18 Y.O as independent would allow for paying less tax but I am not sure if they took into account possible tax credits / deductions / exemptions / other benefits.

Is it really better to file our 18 y.o as an independent ? Wouldn’t filing them as a dependent save more on taxes?

I’m really confused because I am not sure how the unemployment benefit income will affect the parents’ taxes and eligibility for tax savings rules.

sorry for so many questions. I am really confused on how to help get the least tax due

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Best way to file dependent that received unemployment benefits so it won’t badly affect parents’ tax pay? What tax benefits are eligible if filed as dependent versus independent child?

Q. How should I file an 18 year old under their married jointly parents? Would it be better to file them as independent or dependent?

A. You don't get to choose. He either qualifies as your dependent or he doesn't. It's not optional.

There are two types of dependents, "Qualifying Children"(QC) and standard ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test.

A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:

1. He is under age 19 , or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled
2. He did not provide more than 1/2 his own support. Scholarships are excluded from the support calculation
3. He lived with the parent (including temporary absences such as away at school) for more than half the year

So, it doesn't matter how much he earned. What matters is how much he spent on support. Money he put into savings does not count as support he spent on him self.

The support value of the home, provided by the parent, is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants.

Furthermore, there is a rule that says IF somebody else CAN claim him as a dependent, he is not allowed to claim himself. If he has sufficient income (usually more than $12,400), he can & should still file taxes. In TurboTax, he indicates that somebody else can claim him as a dependent, at the personal information section. TT will check that box on form 1040.

Even if he had less, he is allowed to file if he needs to get back income tax withholding. He cannot get back social security or Medicare tax withholding.

With the tax law change, effective 2018, most people, usually, will get the same refund whether they claim themselves or not. The personal exemption has been eliminated and the standard deduction increased. However, you only qualify for an education credit or deduction, if you are not a dependent. But, for 2020, he will probably qualify for the $1800 (1200 + 600) Recovery Rebate Credit (stimulus) if he claims himself.

You will lose the $500 "Other dependent" Credit. if you do not claim him. If he is a college student, you could miss out on up to$2500 tuition credi.

Under the CARES Act, if you are claimed, or qualify to be claimed, as a dependent on someone else’s 2019 return you cannot receive a stimulus check, in 2020. If you qualified as a dependent for 2019, but will not be for 2020, you will most likely get it in 2021, when you file a 2020 tax return.

Note that the requirement is not just whether you are actually claimed as a dependent, it's whether you qualify to be claimed as a dependent.