Tuition and education credits-who gets the deduction


G

goodfella

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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B

Bob Sandler

My daughter obtained student loans on her own and attended a
state university where she got her degree in 2007.
. . . although we were claiming her as a dependent, I didn't pay
for her schooling.
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 .
1) Is there any way that I can claim her tuition
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.
2) Why does the IRS allow the Hope credit to be claimed
but not the tuition?
Because those are the rules in the laws that Congress passed.

Bob Sandler

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
A

A.G. Kalman

goodfella said:
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?
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.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
 
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H

Herb Smith

goodfella said:
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
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.
2) Why does the IRS allow the Hope credit to be claimed
but not the tuition?
Because that is the way the law was written by Congress.

<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
 

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