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Tuition and education credits-who gets the deduction

My daughter obtained student loans on her own and attended a state university where she got her degree in 2007. Using Turbo Tax, I did my income taxes but I didn't included her tuition payments (1099t) as a deduction since although we were claiming her as a dependent, I didn't pay for her schooling. She came home last spring and told me that I could use the tuition that she paid as a deduction on my income tax. Some friends of hers at school said their parents were able to take the deduction. I called the IRS, explained the situation honestly, and they indeed said I could take the deduction since she was my dependent. I filed a 1040x and used incorrect verbage about why I amended my tax return. I wrote that I amended the tax return because I didn't claim the continuing education credits instead of the tuition and education credits. They kicked it back saying they needed form 8863 as backup for the continuing education credits. I called the IRS again to ask another question and in passing asked about claiming my daughter to make sure I could claim her. The IRS person looked up the information and said I COULD NOT claim my daughters tuition as a deduction. I pulled up the tax publication on the internet and read the information myself online and it is pretty clear that I cannot claim my daughters tuition. My qustions are

1) Is there any way that I can claim her tuition 2) Why does the IRS allow the Hope credit to be claimed but not the tuition?

Thanks

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Reply to
goodfella
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Your terminology is very unclear as to which credit or deduction you are talking about. There are three tax benefits for tuition. They are called the Hope Credit, the Lifetime Learning Credit, and the Tuition and Fees Deduction. You can claim the Hope Credit or the Lifetime Learning Credit for tuition that was paid by someone you claimed as a dependent, but you cannot claim the Tuition and Fees Deduction. In your situation, where you claimed your daughter as a dependent but she paid the tuition, neither you nor she can take the Tuition and Fees Deduction. See "Who Can Claim a Dependent's Expenses" for the three different benefits in IRS Publication 970, pages 13-14, 22, and 35 .

It sounds like you can claim the Lifetime Learning Credit, provided that your income is less than the cutoff and you meet the other requirements. See Publication 970 for the details. The Lifetime Learning Credit requires Form 8863. You didn't say what year you are talking about. I assume it's 2006, and that you cannot claim the Hope Credit because your daughter completed her sophomore year before the beginning of 2006.

Because those are the rules in the laws that Congress passed.

Bob Sandler

Reply to
Bob Sandler

Assuming there are no issues with claiming the child as a dependent, there are two tax benefits available for higher education expenses for a student who is not a freshman or sophomore: Lifetime Learning Credit or a Tuition Deduction. You can claim one or the other (not both) if you meet the eligibility requirements. There is one big difference between the two. The Lifetime Learning Credit has a rule that allows you to claim the credit even if your dependent child paid the tuition and fees. The tuition deduction does not have this rule. In other words, if your child paid the tuition and fees and the child is your dependent, then no one can claim a tuition deduction. You need to see if you meet the eligibility requirements for the Lifetime Learning Credit as it doesn't matter whether you paid or your child paid the tuition and fees. You are allowed to consider his payment as if it was made by you. The requirements are in Pub 970.

Reply to
A.G. Kalman

Unless you paid the tuition expenses for your dependent child, you CANNOT claim the Tuition and Fees DEDUCTION (as per Pub 970). Your daughter could claim the deduction, IF you forgo claiming her as your dependent. Alternately, you COULD claim the Lifetime Learning CREDIT (subject to AGI limits), even if the expenses are paid by your dependent. The IRS is correct, you need to file form

8863 to make the claim.

Because that is the way the law was written by Congress.

Reply to
Herb Smith

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