Removing my adult child from my auto policy

C

Cherish

New Member
Jurisdiction
Kansas
My child (21) has been on my policy since receiving his DL. Recently, he permanently moved to another state with great public transport (for work), he doesn't have or plan to have a car there in the next several years.
My undestanding is that I have to remove my adult child from my auto policy (?). His new state of residence doesn't have a requirement to hold a no owner insurance. So basically he may be uninsured while he doesn't own a vehicle.
Is being uninsured going to hurt him when its time to buy a car and get his own auto policy? Should I convince my child to purchase a no owner insurance in the new state?
If he rents cars being uninsured, will his credit card coverage be enough?
When he comes to visit me, he can still borrow one of my cars to drive, correct?
What is the best way to handle this situation? Thank you!
 
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Cherish said:
My undestanding is that I have to remove my adult child from my auto policy (?).
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You don't have to, but you'll save money if you do.


Cherish said:
His new state of residence doesn't have a requirement to hold a no owner insurance.
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I have no idea what you mean by "hold a no owner insurance."


Cherish said:
So basically he may be uninsured while he doesn't own a vehicle.
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If he's not driving and doesn't own a car, he doesn't need auto insurance. In fact, he's likely not able to buy auto insurance. If he happens to drive a friend or family member's vehicle with the owner's permission, he'll be covered as an "Insured" under the vehicle owner's auto policy.


Cherish said:
Is being uninsured going to hurt him when its time to buy a car and get his own auto policy? Should I convince my child to purchase a no owner insurance in the new state?
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Again, I don't know what you mean by "a no owner insurance," but he has no need for auto coverage.


Cherish said:
If he rents cars being uninsured, will his credit card coverage be enough?
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We obviously have no way of knowing what coverage his credit card might provide. If he rents a car, he will need to insure that either: (1) whatever coverage his credit card provides is sufficient under the laws of every state in which he drives the rental car; or (2) he purchases appropriate coverage at the time of rental.


Cherish said:
When he comes to visit me, he can still borrow one of my cars to drive, correct?
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That's up to you.
 
Thank you @zddoodah
My policy can't cover anyone who doesn't reside with me, that's why I said "have to remove"
Some states mandate everyone who holds a valid DL to be insured.. his new state of residence isn't one of them. It makes sense to obtain a DL in his new state
 
The main question is whether or not a gap in being insured hurts someone who decides to get insured a few years later. I mean by increasing his future insurance rates
 
Cherish said:
The main question is whether or not a gap in being insured hurts someone who decides to get insured a few years later. I mean by increasing his future insurance rates
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Auto policy holders will sometimes get a persistency discount, but it's not worth paying the significant cost of unneeded coverage just to keep a discount in place for some unknown time in the future. Additionally, as I indicated, he likely won't be able to buy coverage.

By the way, is there a reason you haven't identified his new state of residence? That might be useful information for others who might want to respond.
 
Cherish said:
The main question is whether or not a gap in being insured hurts someone who decides to get insured a few years later. I mean by increasing his future insurance rates
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Insurers charge more for people who have not had insurance for a long time.

However that is more than offset by not paying for insurance during those years.

As for renting a car for short periods, I buy all the extra coverage from the rental company.

Relying on a claim through a credit card can be a nightmare while the car rental company is breathing down one's neck.

Cherish said:
Should I convince my child to purchase a no owner insurance in the new state?
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He should only get a Named Non Owner policy if he is driving somebody else's car REGULARLY or he can be listed as a driver on their policy (like a girlfriend).
 
zddoodah said:
Auto policy holders will sometimes get a persistency discount, but it's not worth paying the significant cost of unneeded coverage just to keep a discount in place for some unknown time in the future. Additionally, as I indicated, he likely won't be able to buy coverage.

By the way, is there a reason you haven't identified his new state of residence? That might be useful information for others who might want to respond.
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The new state of residence is District of Columbia
 
Thank you for your replies!
I have another question regarding residency and filing taxes.
The timing of his move is such that it allows him to file taxes only in DC (where his new job is located)
Does it mean that I won't he able to file him as a dependent for sure? He graduated from college in May.
I also have a hard time understanding a phrase from dependent status definition "must provide at least half of their support" - what does it mean in simple formula? (Mine income vs child's income)
 
The IRS doesn't make it easy. First you have to determine if he's a qualifying child. Then you have to determine if he qualifies as a dependent. You probably won't be able to figure that out until after the year is over.
 
Cherish said:
Thank you for your replies!
I have another question regarding residency and filing taxes.
The timing of his move is such that it allows him to file taxes only in DC (where his new job is located)
Does it mean that I won't he able to file him as a dependent for sure? He graduated from college in May.
I also have a hard time understanding a phrase from dependent status definition "must provide at least half of their support" - what does it mean in simple formula? (Mine income vs child's income)
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In order for him to qualify as your dependent under the qualifying child test for federal income tax purposes, all of the following conditions must be met:

(a) the relationship condition is met because he's your son.

(b) your home must have been his principal place of residence for more than six months of the year. If he lived with you in your home as his primary residence from January 1 through July 1 that test is satisfied. Time spent away from home while attending college full-time counts towards that six months. If attended college full-time from January 1 to mid-May that gets you about 4½ months. He'd still have to live you in your home after graduation up through and including July 1 to qualify as living there for more than 6 months.

(c ) If he met the student requirement above then he meets the age requirement because he'll be under age 24 on December 31. If he didn't qualify as a student, then the age requirement is that he must be under age 19 on December 31. He's older than that now, so if he wasn't not a student as defined above he will not qualify as your dependent under the qualifying child test.

(d) He can't have provided more the half his support for the entire year. If he has more income (his wages plus any other income he hads) by the end of the year than what you provided to him for support for the year then this condition won't be met and he will not qualify as your dependent under the qualifying child test. Note that generally scholarships are not counted in this computation.

(e) He must not file a joint return for the year with anyone else for the year. If he's married as of December 31 then they'd need to file separate returns, which is not a very good deal for them.

(f) He must be a resident (as defined for tax purposes) or citizen of the U.S. or resident of Canada or Mexico.

In short, assuming your son is a citizen or resident of the U.S. and is single on December 31, he'll qualify as your dependent if unless (1) he wasn't a full time college student for five months of the year, (2) once he graduated, he lived with you until at least July 1, AND (3) he didn't provide over half of his own support for the whole year (not counting scholarships).

I lived in DC for nearly 20 years. Living in most wards of DC is very expensive. If his pay from his job is enough to cover all his living expenses he will probably earn more by the end of the year than you provide in support. That alone would disqualify him from being your dependent.
 
Tax Counsel said:
In order for him to qualify as your dependent under the qualifying child test for federal income tax purposes, all of the following conditions must be met:

(a) the relationship condition is met because he's your son.

(b) your home must have been his principal place of residence for more than six months of the year. If he lived with you in your home as his primary residence from January 1 through July 1 that test is satisfied. Time spent away from home while attending college full-time counts towards that six months. If attended college full-time from January 1 to mid-May that gets you about 4½ months. He'd still have to live you in your home after graduation up through and including July 1 to qualify as living there for more than 6 months.

(c ) If he met the student requirement above then he meets the age requirement because he'll be under age 24 on December 31. If he didn't qualify as a student, then the age requirement is that he must be under age 19 on December 31. He's older than that now, so if he wasn't not a student as defined above he will not qualify as your dependent under the qualifying child test.

(d) He can't have provided more the half his support for the entire year. If he has more income (his wages plus any other income he hads) by the end of the year than what you provided to him for support for the year then this condition won't be met and he will not qualify as your dependent under the qualifying child test. Note that generally scholarships are not counted in this computation.

(e) He must not file a joint return for the year with anyone else for the year. If he's married as of December 31 then they'd need to file separate returns, which is not a very good deal for them.

(f) He must be a resident (as defined for tax purposes) or citeizen of the U.S. or resident of Canada or Mexico.

In short, assuming your son is a citizen or resident of the U.S. and is single on December 31, he'll qualify as your dependent if unless (1) he wasn't a full time college student for five months of the year, (2) once he graduated, he lived with you until at least July 1, AND (3) he didn't provide over half of his own support for the whole year (not counting scholarships).

I lived in DC for nearly 20 years. Living in most wards of DC is very expensive. If his pay from his job is enough to cover all his living expenses he will probably earn more by the end of the year than you provide in support. That alone would disqualify him from being your dependent.
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TaxCouncel, Thank you for detailed reply and most of all, for explaining "half of their own support" rule
(d) would disqualify him.
(b) can be stretched either way but because of the (d) there is no need for it.

They rent apartments with other young people. Its not as expensive as NYC would be.
 
Cherish said:
They rent apartments with other young people. Its not as expensive as NYC would be.
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Yes, that would help cut the expenses. DC is certainly not as expensive as living in Manhattan. The TV show "Friends" was terrific, but painted an unrealistic picture of affordability with 6 young people, most of whom weren't pulling in a lot of money, getting to live in the nice large apartments they had, even with splitting expenses.
 
By the way, what are the chances that he is asked to prove that he has been residing in DC for at least 183 days this year? I am curious how this works.
 
A couple of things come to mind.

The date he signed a lease or rental agreement
The date he got a Maryland driver license or state ID.
The date of his first paycheck.
Dated receipts for groceries or other purchases.
The date his new address shows up on credit card bills.
 
adjusterjack said:
A couple of things come to mind. c

The date he signed a lease or rental agreement
The date he got a Maryland driver license or state ID.
The date of his first paycheck.
Dated receipts for groceries or other purchases.
The date his new address shows up on credit card bills.
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thank you. Can it happen that IRS requests the proof?
I haven't thought about needing to change address on credit cards!
 

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