Discussion:Dependency and tuition deduction
From TaxAlmanac
Discussion Forum Index --> Tax Questions --> Dependency and tuition deduction
| January 31, 2007 | |
| Hello.
What's your thoughts.... A parent has a child who's 22yrs old. In 2006, the child lived away from home and supported himself while attending college and worked part-time. (Will have to verify full-time student status)! But the parent's paid the tuition and are paying the student loan. Issues: 1. Tuition deduction 2. Exemption 1. The parent can still claim the tuition deduction even though not claiming kid on their return? Is this possible? 2. Since the child is supporting himself, even though a student, doesn't that child have the right to claim his personal exemption.. even though... he qualifies as a dependent for the parents?? - Doesn't the support test or income test come into play when the child is supporting oneself now that he's living on his own??? Has anyone come across this lately in that the child has moved away from home and supports himself while attending school though the parent's are only paying for his college tuition?? The tax law has the exception that so long the dependent is a full-time student and over 18 but under 24 yrs., the parents are entitled to claim that child as a dependent. Normally, a comparison would be made to see who benefits from the tuition deduction/credit but it's easier when the child technically lives at home and intends of returning. The child can even claim the tuition paid by the parents but neither would get the exemption deduction. Thank you! | |
| 31 January 2007 | |
| 1. No 2. Not a QC of parents if student is providing more than one half of his own support. Student can claim himself and gets tuition and fees deduction. | |
| 31 January 2007 | |
| Parents can only deduct and receive credits for dependents only if the dependent is listed as a dependent on the parents' tax return. No exemption for dependents = No Deduction for tuition/fees deduction/credit.
He can still qualify as a dependent if his living expenses are $10,000 (supported by himself) and Tuition related expenses are $25-30k :P | |
| January 31, 2007 | |
| Thanks so far for the replies.
Clarification... The tax law does allow the student child to claim the tuition deduction/credit on his/her return but neither the parent nor the child gets the exemption; also, provided also that the child has taxable income/taxes to be used against the deduction/credit. My understanding was that the child HAS been to be claimed as a dependent on the parent's return in order for the parents to get the tuition deduction/credit on their return. If not, the deduction/credit Could go the child as in the first sentence. Any additional thoughts would be appreciated. Thanks again! | |
| 31 January 2007 | |
| I think a common misunderstanding is the belief that a full time student under age 24 can automatically be claimed as a dependent by his parents. While age and student status are factors, the other requirements have to be met as well. | |
| January 31, 2007 | |
| Further clarification...
Just checked the Code, Regs and instructions.... The issue has to do more with the residency/household test... Provided that the child is a full-time student, the income test does not matter. The law provides the exception for a dependent who's a full-time student to be claimed as a dependent. The issue really comes done to the exception to the residency/household test... The law provides for temporary abscences from the household due to special circumstances such as education. So, if a child moves out and supports oneself while still going to school full-time and not receiving support from the parents (except that the parents still pay the tuition), does the child "truly" qualify as a dependent for the parents or can that "child" claim it's own exemption as well as the tuition deduction/credit on his return?? Thanks again for the replies. | |
| 1 February 2007 | |
| Based on the situation presented here, the real issues are the support tests. According to your scenario, the child cannot be a QC because the child provides over half of his own support. Looking then to the QR tests, the support test is again failed because the parents do not provide over half of the childs support. Since the child is neither a QC nor a QR of the parents, they cannot claim him as a dependent. Since no one else can claim him as a dependent, he takes his own exemption and the tuition credit/deduction. | |
| 1 March 2009 | |
| How about the scenario that dad pays child's college tuition of $20K, but child lives with mom. Rule states that tuition becomes child's money which then becomes mom's deduction if mom claims the child as dependent. The question really is: is the 20K now counted as the child's contribution to her own support for the QC question..does the child pay more than half her own support. | |
| 1 March 2009 | |
| Mchaneas, under no circumstance can the child claim a tuition deduction under Sec. 222 for tuition paid by the parents. However, the child may claim a LTL credit under Sec. 25A for tuition paid directly to the university by the parents. | |
| 1 March 2009 | |
| Easharen, the rule you are citing applies to the tuition credit, but not the tuition deduction.
No, the $20k from dad is not self-support. | |
| 1 March 2009 | |
| As mentioned I think ... Only the person that pays the tuition may take or use the tuition and fees deduction.
I think these are kind of unique situations. Child (parents divorced) age 20 in school and lives with mom. Child does not provide over 50% of his own support. In fact, poor dad provides 90% of his childs support. Assuming the age of majority is 18, which it is in most states, the only one that would be able to claim the childs dependency exemption is Mom. Doesn't really make sense to me but that seems to be the way it is. | |
| 1 March 2009 | |
| Agreed. If the child is not in the "custody" of either parent, then the mother cannot release the exemption to her ex. | |
