Education Credit

[cathe]

This is in reference to this year's Income, Deductions, and Credits self-study Tax Review course.
In reading the section on education credits, I come across this: "Choosing not to claim an exemption for a dependent -. If the taxpayer chooses not to claim the exemption, the student can claim a Lifetime Learning Credit. The student is not entitled to claim his or her own exemption."
Am I just not reading this right? If the taxpayer is not claiming the exemption and the student is not claiming the exemption....who is claiming the exemption? No one?

Didn't know where else to take this question.

Cathe

[KBTS]

You are correct - if the parents choose to not claim the dependency exemption for the student, then the student can claim the education credit. In this case, no one gets the exemption.

[WhiteOleander]

Yes, that's one of the most difficult things to make my clients understand. They think the exemption can be traded around and given where the most benefit is obtained. But, to claim the exemption, the rules must be followed. So, if the student can't meet the qualifications, he/she cannot claim the exemption even if the parents don't.

[oceanlovin'ea]

I ran into that situation a couple of weeks ago with a return I was preparing. Because of the income limitations, the education credits weren't allowed on parent's return.
Dependent had income too. But the education credit wasn't enough to make up for him not being able to claim his exemption.
Did the returns both ways. Still was better for parents to claim him and no one get education credits. But very difficult for client to understand. Just read from book to them and said this is IRS rules.

Linda, EA

[Burke]

Yes, that's one of the most difficult things to make my clients understand. They think the exemption can be traded around and given where the most benefit is obtained.

I run into the same thing and not only with dependents but with itemized deductions.