Clarification on Exception to the Student Rule

Q The October issue of the Insider stated that a full-time student household doesn’t violate the student rule if “the household consists of a single parent with a dependent child (or children), and neither the parent nor the child (or children) is being claimed as a dependent by anyone else.” (See “Use Lease Clause When Households Violate Student Rule Mid-Lease.”) In a situation in which a dependent child is claimed on the other, nonresident parent’s taxes, does the exception to the student rule apply?

A Yes. Special thanks to tax credit consultant Karen Graham for pointing out the omission in the article. The tax credit rules state that “the unit shall not fail to be treated as low-income merely because it is occupied entirely by full time students if such students are a single parent and their children and such parents are not dependents of another individual and such children are not dependents of another individual other than a parent of such children.”

It is the IRS’ intent that the other parent can be claiming such children, says Graham. For example, a woman and her two children apply to your site, and they are all full-time students. To meet the single parent student exception, the woman must be filing her own tax return claiming both of her children as dependents or the father can be claiming them. No one else, such as the grandmother or a friend, can be claiming the mother or the children, says Graham.