Education Credit

[Christian]

A young woman incurred college tuition expenses in 2009 and 2010 which she paid herself.

She lived at home with a parent who listed her as his dependent but did not himself claim either of the two available education credits. The tuition amounts are reported on Form 1098-T and show the amounts paid under the young woman's social security number. She filed a return for both years as well but claimed no exemption for herself. My reading is she can file an amended return for both years and claim a credit. Any input would be appreciated.

[kcjenkins]

Yes, she could take either the AOC or the Hope, but not the Lifetime.

[Jack from Ohio]

Only the parent, who claimed her as a dependent may file for the credit. She cannot.

[gfizer]

I agree with Jack. Only the person entitled to claim the dependency exemption can claim the education credit regardless of who actually paid the expenses.

[kcjenkins]

That is true for the Lifetime, but not for the Hope or AOC.

[Jack from Ohio]

That is true for the Lifetime, but not for the Hope or AOC.

Disagree. A dependent cannot claim AOC or LLC.

[jainen]

>>Only the person entitled to claim the dependency exemption can claim the education credit<<

What's going on in this thread? Pub 970, Tax Benefits for Education, is written at about the 5th grade level. It takes each credit individually and spells out exactly Who Can Claim the Credit and Who Cannot Claim the Credit. It says, "You cannot claim the American opportunity credit for 2012 if any of the following apply....You are listed as a dependent on another person's tax return (such as your parents')." It uses identical wording for the Lifetime Learning Credit, and in prior-year versions of Pub 970.

It does NOT say a dependent can't claim the credit. A standard strategy for parents with high AGI is to skip the exemption so the dependent can qualify. This strategy is offered by the IRS itself in a chart on page 15 of Pub 970. That, in turn, is taken from Reg Section 125A-1(f).

[Christian]

Aieeeeeeeeeeeeeeeeeeeeeeeeee ! Chi wah wah.

[Jack from Ohio]

>>Only the person entitled to claim the dependency exemption can claim the education credit<<

What's going on in this thread? Pub 970, Tax Benefits for Education, is written at about the 5th grade level. It takes each credit individually and spells out exactly Who Can Claim the Credit and Who Cannot Claim the Credit. It says, "You cannot claim the American opportunity credit for 2012 if any of the following apply....You are listed as a dependent on another person's tax return (such as your parents')." It uses identical wording for the Lifetime Learning Credit, and in prior-year versions of Pub 970.

It does NOT say a dependent can't claim the credit. A standard strategy for parents with high AGI is to skip the exemption so the dependent can qualify. This strategy is offered by the IRS itself in a chart on page 15 of Pub 970. That, in turn, is taken from Reg Section 125A-1(f).

Explain how a parent can "skip the exemption" and still claim the child as a dependent? Even so, the child who COULD be dependent of their parents cannot receive the refundable portion of the AOC. No confusion here on my part.

[mcb39]

The credit always follows the dependency; no matter who paid for it.

[jainen]

>>The credit always follows the dependency<<

No it DOESN'T! Read page 15 of Pub 970--or just read the instructions to the form you're filling out. A family can shift the education credit to a dependent, even when the family income is otherwise too high to be eligible!

[HV Ken]

I'm with jainen. Quoting Pub 970:

IF you: do not claim an exemption on your tax return for a dependent who is an eligible student (even if entitled to the exemption)

THEN only: the dependent can claim the American opportunity credit. You cannot claim the credit based on this dependent's expenses.

Seems pretty cut and dry to me.

[Christian]

Thanks for all of your responses. Since old dad claimed her as a dependent then only he can file for the credit. Apparently he is unaware of his good fortune and since his daughter paid for her schooling I suspect he will remain ignorant of it.