Education Credits and/or T/F Deduction

[GraceNY]

Just want to check my understanding.

Taxpayer's daughter graduated in May of 2015 and got hired shortly thereafter. 

Taxpayer cannot claim the daughter as a dependent on 2015 return.

2015 1098-T issued showing $27,000 in Scholarship box.  All other boxes blank.  ( I know about the mismatches between billing and payments, that's not my question)

Taxpayer paid the tuition.  Since taxpayer is not claiming the daughter on the 2015 return, taxpayer is not eligible to claim any education-related credits nor deductions on the tuition paid.?

Since the daughter did not pay the tuition, she is not eligible to claim any education-related credits nor deductions?

Lastly, I will look at the College's financial office detail for 2015.  If any part of the scholarship money could be considered taxable (considering the details of the scholarship and what it was used for), what about using that to allow the daughter to take an education credit and/or deduction?

Just want to see if I am missing anything.

Thanks.

Grace

[Terry D EA]

First, you need to find out how much the scholarship paid and how much the tax payer paid so you know what you are dealing with. What are the reasons the daughter cannot be claimed as a dependent? Did she provide more than half of her support? Did she change residence? Before she graduated, was she enrolled as a student at least half time? Was the daughter under 24 at the end of the year?

The only way the parents can take the education credits is if they are able to claim an exemption for their daughter.

If the daughter claims and exemption for herself, she can use the education expenses for which ever credit applies to her situation. It does not matter who paid them but they are reduced by the scholarship amounts.

[GraceNY]

1 hour ago, GraceNY said:

2015 1098-T issued showing $27,000 in Scholarship Box.

 

Oops should have been $9,700 in Scholarship Box not $27K

[GraceNY]

1 hour ago, Terry D said:

First, you need to find out how much the scholarship paid and how much the tax payer paid so you know what you are dealing with. What are the reasons the daughter cannot be claimed as a dependent? Did she provide more than half of her support? Did she change residence? Before she graduated, was she enrolled as a student at least half time? Was the daughter under 24 at the end of the year?

 

Total "qualified" tuition and fees for the Spring Semester were$19,650.  Taxpayer paid via a parent loan 9,950 balance paid by Scholarship.

Although the daughter was only 22 in 2015, she stayed, and is currently living, in the state where she graduated from college and earned about $35K in wages.

Box on 1098-T is marked "at least halftime."

[Gail in Virginia]

I think that one of the points Terry was making is that if the daughter was a full time student for at least some part of five months of the year, under age 24, and parents provided more than 50% of support, her income does not matter and she could be claimed as a dependent.  They may choose not to claim her since she made that much money, or she may have provided over half of her own support in which case they cannot claim her, but the gross income test does not apply in this case.

[Terry D EA]

Thanks Gail, that was exactly my point.

[GraceNY]

Thank you both.  I'm just exhausted and under so much stress (as I am sure others are) and can't seem to think through this stuff)  I understand what you are saying  and am awaiting details from client so I can move on.