Educatin Exp

[TAX]

Client, 1040, MFJ has two daughters.

(1) Both in college

(2) Parents can claim them as dependents but they do not as their income is very high and they will not get any education credit for these children.

(3) Can these daughters file their own returns as they can get refundable education credit?

[Koss]

Probably not

In theory, they can claim the nonrefundable part of the credit, but that won't help them if they have little or no tax liability. If they meet the criteria to be a qualifying child of their parents, then they cannot claim the refundable credit.

According to the instructions for Form 8863:

Part III Refundable American Opportunity Credit
Line 13

If you were under age 24 at the end of 2010 and the conditions listed below apply to you, you cannot claim any part of the American opportunity credit as a refundable credit on your tax return. Instead, your allowed credit, which is figured in Part IV, will be used to reduce your tax as a nonrefundable credit only.

You do not qualify for a refund if 1(a, b, or c), 2, and 3 below apply to you.
1. You were:
a. Under age 18 at the end of 2010, or
b. Age 18 at the end of 2010 and your earned income (defined below) was less than one-half of your support (defined later), or
c. A full-time student over age 18 and under age 24 at the end of 2010 and your earned income (defined below) was less than one-half of your support (defined later).
2. At least one of your parents was alive at the end of 2010.
3. You are not filing a joint return for 2010.

If you meet these conditions, check the box next to line 13, skip line 14, and enter the amount from line 13 on line 15.

BMK

[MilTaxEA]

They only get the refundable portion of the credit if their *earned* income is more than half of their support.