Educational Credits

[Rainman1966]

Parents income is too high to take any college tuition credits.  I am taking the student off of the parents return as a dependent so he can file and supposedly get the form 8863.  Here is what I have done on the students tax return.  On the Information Worksheet, Part X I have checked the box for education expenses.  For Dependent of Someone Else I have check "Yes" that he could be claimed by the parent.  The next box I checked "No" that he is not claimed on the parent's return.  "No" on that line is suppose to allow the student to take student loan interest and the college credits.  Tuition is $10754.  Student's AGI is $8934.  At the bottom of form 8863 (Addl questions under age 24) when I check the box 'No" in item 2 regarding earned income exceeding 1/2 of your support the credit disappears.

Using the ITA on IRS.gov it says a credit is allowed.  Any suggestions.

[rbynaker]

The credit will not be refundable but it will wipe out any income tax on the student's return.  Is there any tax on the return (depends on what the AGI is made up of)?

[Just-Lisa-Now- · Accepted solution]

You'll have to mark

CAN they be claimed, YES   

WAS the child claimed NO

And the credit will only be the non-refundable portion, so with 8900 of AGI, I dont think it will make a difference.  Is the parents income high enough that they dont get the CTC either?  

[Rainman1966]

The student income is all from a W-2.  Parents phased out due to their income is above the $180K.  I guess ProSeries had the correct calculation.

Thanks for the prompt response..

[Rainman1966]

There is no tax liability on the student's return.

[chenschuh]

Is the benefits for the student worth more than 500. Parents loss $500 on child tax credit.

[ea_rva aka acctgtaxmatters]

@Just-Lisa-Now- @rbynaker 

I have a similar scenario:

Parents income too high for education credits & CTC. They also have a 1099-Q (taxpayer recipient fbo of dependent), so I had to add 1098-T info to their return. Thus the 1098-T info is not being used towards credits but rather to offset 1099-Q distributions.

Dependent has W2 income > 1/2 his support.

Since the 1098-T info is on the parents for 1099-Q, can it also be added to the dependent's return to claim the education credits?

[rbynaker]

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@ea_rva aka acctgtaxmatters wrote:

@Just-Lisa-Now- @rbynaker 

I have a similar scenario:

Parents income too high for education credits & CTC. They also have a 1099-Q (taxpayer recipient fbo of dependent), so I had to add 1098-T info to their return. Thus the 1098-T info is not being used towards credits but rather to offset 1099-Q distributions.

Dependent has W2 income > 1/2 his support.

Since the 1098-T info is on the parents for 1099-Q, can it also be added to the dependent's return to claim the education credits?

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The same expenses can't be used for more than one education benefit but you can allocate them how you want to get the best tax result.  It may be better to first use the expenses on the student's return for an education credit even if the parents have to pay some tax on the 1099-Q.

I've never seen a unicorn . . . or a dependent with earned income that's more than 50% of their support.  That generally means the college student earned income that just went into savings.  Before taking any education credits I would focus my due diligence on documenting that the earned income is > 1/2 support.

[ea_rva aka acctgtaxmatters]

@rbynaker 

Thank you!! I so appreciate and was exactly what I needed to know. Take care.