Current gifts are generally included in the support test for determining dependency status. When the parents Adjusted Gross Income reaches a certain level, all or part of their personal exemptions are phased-out. If this is the case, the parents should consider failing the support test for the child. This would allow the child to claim the personal exemption on the child’s tax return. It would also increase the child’s standard deduction from $1,050 (for a dependent taxpayer) to $12,000 (for a single tax payer). Gifts should be made in years prior to the expenditures by the child (or child’s custodian) for college costs. Because of low income, the child would probably qualify for the American Opportunity or Lifetime Learning tax credits and the student loan interest deduction.