Insurance for College Student

[SchruteBucks]

Quick question: if a 19-year old college student attends out of state college and only lives at home 90 days of the year, files taxes independently (not a dependent on his parents tax form) and technically “pays” for tuition / room / board (paid directly through through a 529 in which he is the beneficiary, and the parents funded as account holders), and works to pay his discretionary expenses. Could any liability fall on his parents under this arraignment? He has a moped for campus registered in his name and he insured minimally as the policy holder. The title, out of state registration, and bill of sale are in his name, as well.

He is insured under parents auto and umbrella as he uses one of the parents cars when home in summer and on breaks. Could the parents be liable for any liability issues while driving the moped? Parents pay some things like shared Netflix, cell phone service, occasional lumpy things like dorm room furniture, which could be technically considered gifts, etc., and all is under the gift exclusions limits. If we added up this and the market rate “room and board” (that his parents DONT charge for his summer return), it’s still under the gift limit. Any issues that you see?

[psteinx]

1) IANAL
2) Anybody can sue you at any time for anything (more or less). Could you be sued, versus, could you be sued SUCCESSFULLY.
3) Most likely serious injury ($$$ liability) involving a moped would be to the moped driver. Yeah, a person on a moped could injure a pedestrian, but...
4) Are you really sure you shouldn't be claiming him as a dependent? This is not really a choice, he either IS or IS NOT a dependent, based on the fact pattern. It's not clear to me that he is not a dependent.
5) What decision would you (potentially) make differently, if you thought you, the parents, had non-trivial liability, related to the moped or otherwise?

[123]

...attends out of state college and only lives at home 90 days of the year,...

He's a member of your household and should be included on your auto insurance policies, the same as if he lived there full time. If he gets into a situation you've got deeper pockets than he so you could be a target. Ask you insurance agent about how things work in your state. Undoubtedly umbrella coverage should be considered.

[SchruteBucks]

1) IANAL
2) Anybody can sue you at any time for anything (more or less). Could you be sued, versus, could you be sued SUCCESSFULLY.
3) Most likely serious injury ($$$ liability) involving a moped would be to the moped driver. Yeah, a person on a moped could injure a pedestrian, but...
4) Are you really sure you shouldn't be claiming him as a dependent? This is not really a choice, he either IS or IS NOT a dependent, based on the fact pattern. It's not clear to me that he is not a dependent.
5) What decision would you (potentially) make differently, if you thought you, the parents, had non-trivial liability, related to the moped or otherwise?

1. ? Misspelling?
2. dah
3. He could swerve and create pileup from other drivers actions as he is driving on roads and it’s considered a motorcycle under insurance. Unlikely, but isn’t that why you have umbrella?
4. Yes he is a dependent according to our CPA as he files his own taxes on his earnings and he is not claimed by parents. Parents don’t pay tuition or living expenses, technically.
5. The choice to leave him off umbrella is $1500 (includes insurance premium difference to meet umbrella requirements)

[henry]

1) IANAL

1. ? Misspelling?

IANAL is internet slang for "I am not a lawyer."

[SchruteBucks]

1) IANAL

1. ? Misspelling?

IANAL is internet slang for "I am not a lawyer."

Hahaha - I thought you were accusing the parents of being too anal in asking the questions

[DoubleComma]

1) IANAL
2) Anybody can sue you at any time for anything (more or less). Could you be sued, versus, could you be sued SUCCESSFULLY.
3) Most likely serious injury ($$$ liability) involving a moped would be to the moped driver. Yeah, a person on a moped could injure a pedestrian, but...
4) Are you really sure you shouldn't be claiming him as a dependent? This is not really a choice, he either IS or IS NOT a dependent, based on the fact pattern. It's not clear to me that he is not a dependent.
5) What decision would you (potentially) make differently, if you thought you, the parents, had non-trivial liability, related to the moped or otherwise?

1. ? Misspelling?
2. dah
3. He could swerve and create pileup from other drivers actions as he is driving on roads and it’s considered a motorcycle under insurance. Unlikely, but isn’t that why you have umbrella?
4. Yes he is a dependent according to our CPA as he files his own taxes on his earnings and he is not claimed by parents. Parents don’t pay tuition or living expenses, technically.
5. The choice to leave him off umbrella is $1500 (includes insurance premium difference to meet umbrella requirements)

I think it all hinges on if your 19 y/o is technically your dependent or not. Your child using 529 funds to pay for college is not self-support. They might be the beneficiary of the account, but they aren't the account owner. Technically this is getting support from the account owner, which it sounds like is you.

Regardless of how you and you student are filing taxes, this appears to me that this child is your dependent. This means from an insurance and liability perspective I would treat it exactly the same as you would have a year or two earlier when they were still living full time under your roof.

[986racer]

1) IANAL
2) Anybody can sue you at any time for anything (more or less). Could you be sued, versus, could you be sued SUCCESSFULLY.
3) Most likely serious injury ($$$ liability) involving a moped would be to the moped driver. Yeah, a person on a moped could injure a pedestrian, but...
4) Are you really sure you shouldn't be claiming him as a dependent? This is not really a choice, he either IS or IS NOT a dependent, based on the fact pattern. It's not clear to me that he is not a dependent.
5) What decision would you (potentially) make differently, if you thought you, the parents, had non-trivial liability, related to the moped or otherwise?

1. ? Misspelling?
2. dah
3. He could swerve and create pileup from other drivers actions as he is driving on roads and it’s considered a motorcycle under insurance. Unlikely, but isn’t that why you have umbrella?
4. Yes he is a dependent according to our CPA as he files his own taxes on his earnings and he is not claimed by parents. Parents don’t pay tuition or living expenses, technically.
5. The choice to leave him off umbrella is $1500 (includes insurance premium difference to meet umbrella requirements)

I think it all hinges on if your 19 y/o is technically your dependent or not. Your child using 529 funds to pay for college is not self-support. They might be the beneficiary of the account, but they aren't the account owner. Technically this is getting support from the account owner, which it sounds like is you.

Regardless of how you and you student are filing taxes, this appears to me that this child is your dependent. This means from an insurance and liability perspective I would treat it exactly the same as you would have a year or two earlier when they were still living full time under your roof.

You don't have to declare someone as a dependent if you don't want to. Whether or not that person gets additional tax benefits due to not being declared a dependent will depend on the exact part of the tax code you are looking at.

With that being said, I don't see how your 1040 form is going to affect your insurance. I'm sure that the insurance industry and liability laws have their own definitions of whether someone is legally your dependent.