TP's AGI to high for Ed credits, other options?

[AZ-Tax]

I know the dependents can be claimed on TP and still file their own tax return and of course to do that, the dependents would have to had some taxable income. Assuming that is the case, can the dependents claim the Ed credits on their own tax return? Hopefully I am wording this correctly.

[Gary2]

If the dependent is not claimed by the parent (or whomever), then even though they still cannot claim their own exemption, the dependent can claim the AOC. Usually they won't be eligible for the refundable part, so this only helps if their income is high enough to have a tax liability.

[Bonnie]

Parent can take the tuition and fees deduction. If their income is high enough to not qualify for the credit this is usually a big benefit

[AJsTax]

The AOC

phaseout is higher than the fees and tuition deduction with the current rules. I had one that just went over the limit because of oil well lease income and lost all credit, deductions, etc for his and his wife's education expenses.

[AZ-Tax]

AGI also to high for deduction....

Parent can take the tuition and fees deduction. If their income is high enough to not qualify for the credit this is usually a big benefit

What does AOC stand for?

[Lion]

American Opportunity Credit

American Opportunity Credit, the enhanced & expanded version of the Hope Credit

[AZ-Tax]

Will NOT work, period

American Opportunity Credit, the enhanced & expanded version of the Hope Credit

Ran a sample client with one of the kids NOT claiming himself. $10K box 1 w2 wage, $2K fed withheld. Tax software said "not claiming self as depedent, no credit for any AOC, LT, or Deduction.

Sound correct?

[Gary2]

Ran a sample client with one of the kids NOT claiming himself. $10K box 1 w2 wage, $2K fed withheld. Tax software said "not claiming self as depedent, no credit for any AOC, LT, or Deduction.

Sound correct?

Nope, sounds wrong.

[David1980]

Ran a sample client with one of the kids NOT claiming himself. $10K box 1 w2 wage, $2K fed withheld. Tax software said "not claiming self as depedent, no credit for any AOC, LT, or Deduction.

Sound correct?

The problem is a lot of software makes the assumption that can be claimed as a dependent = is claimed as a dependent. Can be difficult to explain that while they can be claimed as a dependent, they're not actually being claimed, and thus can claim education credits.

Does the student have any tax liability of their own? If not, then it really doesn't matter.

[AZ-Tax]

David in reality I dont know

I just ran a mock tax return on my ProSeries tax software with a $10K box 1 w-2 and $2k of fed withholding and it said "not claiming as dependent, no Ed credit of any kind and no tuition deduction.

[David1980]

In ProSeries, in the section where you mark that they can be claimed as a dependent there's another question of whether they actually were claimed.

So you should have "Can taxpayer be claimed as a dependent of another person (such as parent)?" marked Yes. The next one down, "If yes, was taxpayer claimed as dependent on that person's return?" should be no.

It should then let you take the credit. Tested this in last year's ProSeries (don't have current years) and it gave me a credit of $433 for $10,000 wages and AOC. (It was limited to $433, because that was the amount of tax showing on line 28 of 1040A.)

No errors on return.

[AZ-Tax]

Dave worked for nonrefundable but not refundable

In ProSeries, in the section where you mark that they can be claimed as a dependent there's another question of whether they actually were claimed.

So you should have "Can taxpayer be claimed as a dependent of another person (such as parent)?" marked Yes. The next one down, "If yes, was taxpayer claimed as dependent on that person's return?" should be no.

It should then let you take the credit. Tested this in last year's ProSeries (don't have current years) and it gave me a credit of $433 for $10,000 wages and AOC. (It was limited to $433, because that was the amount of tax showing on line 28 of 1040A.)

No errors on return.

I had ProSeries on the line with me for about an hour. Only way it will work is the kid needs to claim himself therefore the parents loose the dependent. Kid gets $1392 refundable credit.

[taxea]

It is very foolish for the parent not to take the child as a dependent and take the tuition credit. The child seldom makes enough income for him/her to file single non-dependent just to get the credit.

[taxea]

to AZ tax

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Please clear your stored private messages. I would like to send you one but can't get through and really don't want to put it in the public forum

[Lion]

Taxpayer Receives No Benefit

The OP explained that his client had AGI too high to benefit, so was asking about student claiming education benefits without claiming own exemption if parents do not claim student. It seems he has more of an issue with getting the desired outcome in his software than of deciding how to file.