College Tuition Credits (Federal and NYS)


G

Geoff

I can either claim my son as a dependent and get my credits,
or not claim him as a dependent and he gets credits.

My income this year is pretty substantial; his is trivial.

As I see it, if I claim him I get a State credit, but lose
the federal credit because my income is too high. If I don't
claim him he gets the federal credit but loses the state
credit because his income is too low to get any benefit from
it.

Is that seem likely. It is what TaxCut says, but TaxCut
seems a little flakey this year.

Second; I don't seem to get any benefit by taking him as a
dependent other than the tuition credit. Do dependent
benefits go to zero with income?

Thanks.
 
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P

Phil Marti

Geoff said:
I can either claim my son as a dependent and get my credits,
or not claim him as a dependent and he gets credits.

My income this year is pretty substantial; his is trivial.
Keep this point in mind. It's important.
As I see it, if I claim him I get a State credit, but lose
the federal credit because my income is too high. If I don't
claim him he gets the federal credit but loses the state
credit because his income is too low to get any benefit from
it.

Is that seem likely. It is what TaxCut says, but TaxCut
seems a little flakey this year.
I can't speak for TaxCut, but it sounds probable because of
the various Federal phaseouts.
Second; I don't seem to get any benefit by taking him as a
dependent other than the tuition credit. Do dependent
benefits go to zero with income?
Yes. Personal exemptions are phased out above AGI just
under $113,000. Click on line 42 of the 1040 and you should
be able to open the worksheet where this calculation is
done. Personal exemptions also don't count in AMT.

The best way to decide is to total up the tax on all four
returns two ways: one with you claiming his exemption and
one with no one claiming his exemption. Then figure out
which way gives the least total tax for the two of you.
 
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D

Don Priebe

If I don't claim him he gets the federal credit but loses
the state credit because his income is too low to get any
benefit from it.
The NYS College Tuition Credit (Form IT-272) is a refundable
credit.
 
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M

Mark X. Rigotti, CPA

Keep this point in mind. It's important.
I can't speak for TaxCut, but it sounds probable because of
the various Federal phaseouts.
Yes. Personal exemptions are phased out above AGI just
under $113,000. Click on line 42 of the 1040 and you should
be able to open the worksheet where this calculation is
done. Personal exemptions also don't count in AMT.

The best way to decide is to total up the tax on all four
returns two ways: one with you claiming his exemption and
one with no one claiming his exemption. Then figure out
which way gives the least total tax for the two of you.
Except that If the child did not pay half his own support
then even he can not claim his own exemption. With the
income level of the parents I will be willing to bet anyone
that the child fails his own support test. Therefore the
educational credits MUST stay with the parents.

Regards,

Mark Rigotti
 
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Phoebe Roberts, EA

If the child did not pay half his own support
then even he can not claim his own exemption.
True.

Therefore the
educational credits MUST stay with the parents.
False. If the parents don't claim a dependency exemption
(because their income is high enough that their personal
exemptions are entirely phased out, for instance), the child
cannot claim an exemption for himself, but may claim the
education credits.

Phoebe :)
 
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