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Education credits and 1099-Q

I am trying to complete my sons taxes and am confused by the education credits. I cannot claim him as a dependent because he made more money than me in 2009. He attended school full time. He got a Pell grant in the fall semester, for which we got a 1098-T; all of his tuition was covered by this. In the winter semester 2009 his tuition was covered by the Michigan MET program and we got a 1099-Q for that. The 1098-T is showing a larger amount for expenses (box 2) than for the grant (box 5) so he is coming up as eligible for the American Opportunity Credit. But even though I put in the amount from the 1099-Q under the MISC income, it is not offsetting the credit anywhere. (I have tried this using both Turbo Tax online and TaxCut online and they both show him getting a credit). How can he get a credit when he actually did not pay any tuition out of pocket?

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Reply to
swordse
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The only way to tell if someone is eligible for a higher education tax benefit is to keep track of the eligible expenses you and your son paid out of pocket that were not reimbursed. Based on what you posted, there were no unreimbursed eligible higher education expenses. Therefore, there is no tax benefit.

The mere fact that your son may have more income than you does not disqualify him from being your dependent. If he is a full time student under the age of 24 and his attendance at school away from your home (his domicile is your home) is temporary then he would be your qualifying child as long as he was not self-supporting. To make that determination, you would need to see whether he provided more than half of his own support.

Reply to
Alan

As has already been mentioned, that doesn't preclude his being a dependent. See Publication 501.

You can elect to treat 1099Q money as taxable and use it as the basis for credits. See the discussion in Pub 970.

Phil Marti Clarksburg, MD

Reply to
Phil Marti

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