Obviously I am not the only one that beats myself up over the refundable portion of this credit. I have a client 20, earned income of $9,348, both parents alive,not a full time student (9 hours ea semester) single filing, parents not claiming him nor did they last year, supported more than one-half support. This is the situation my tax program is allowing the refundable portion of the credit. My collegue who has the same scenario different tax program does not qualify for the credit period. Anyone out there have any comment on this.
-
-
A single taxpayer under age 24 cannot get the refundable portion of the American Opportunity Credit, according to TheTaxBook on page 12-3. -
Although it is not likely that this is the key, the comparison is not whether they provided more than half of their own support, but whether they provided more than half of their own support through earnings. Support paid for with savings or sale of stock or retirement fund distributions or student loans would not be considered earned income.Originally posted by DONNA ASTON View Post
However, to me, the key for your situation is that your student is not a full-time student and thus is eligible for the refundable portion of the credit even though he may not have supported himself at all.
Are you sure the other tax program is handling the identical situation? It could be the way it was coded since the proper checking of boxes for these credits is notoriously fraught with gotchas in every package.DougComment
-
many issues
First to get AOC the student has to be at least a half time student. If he is, then are parents not claiming him becasue he is providing over 1/2 of his own support or becasue they choose not to claim him. If the latter he is not eligible for the refundable part of the AOC. If the former, is his 1/2 of support coming from earned income (he gets the refundable AOC) or unearned income (he does not get refundable AOC).Comment
-
Kram's answer was succinct and to the point. In addition to meeting the criteria mentioned the tax pro has to enter or input in the information correctly in order to get the proper result.Comment
-
Actually, the requirement is that the student be at least half time (which he is according to the original post). Unless the individual is disabled, the student cannot be a Qualifying Child since the student is not a full-time student and is over age 18. This student cannot be claimed as a Qualifying Relative since the income is at least $9,348 (which fails the gross income test).
Thus, there are multiple ways that this student is exempt from the Kiddie Tax rules which are used to disallow the refundable portion of the credit.DougComment
-
Here is how I look at this:Originally posted by dan doshan View Post
The rules are as follows:We know that the student meets criteria 2 and 3, so if the student meets the requirement of item #1, it is three strikes and the student is out (of the refundable portion).You do not qualify for a refund if items 1 (a, b, or c), 2, and 3 below apply to you.
- You were:
- Under age 18 at the end of 2010, or
- Age 18 at the end of 2010 and your earned income (defined below) was less than one-half of your support (defined below), or
- 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 below).
- Under age 18 at the end of 2010, or
- At least one of your parents was alive at the end of 2010.
- You are filing a return as single, head of household, qualifying widow(er), or married filing separately for 2010.
The student must meet a, or b, or c to lose the refundable portion. The student fails to meet a and b due to age. For c, the student must be a full-time student AND within the age bracket AND provide less than half of his support with earned income. By not meeting any one of those conditions, the student is allowed to claim the refundable portion of the credit. The original post says that the student is not a full-time student.Last edited by dtlee; 02-07-2012, 02:52 PM.DougComment
- You were:
-
In defining a student's enrollment status for tax purposes, isn't "at least half time" the equivalent of "full time?"Originally posted by dtlee View PostComment
-
Unfortunately, I don't have time to peruse the code for a citation this afternoon.Originally posted by BP. View Post
Here is the half-time definition for the credit from Publication 970 (2010 version since 2011 is not available):Here is the definition of a full-time student for purposes of the Kiddie Tax from Publication 17:Enrolled at least half-time. A student was enrolled at least half-time if the student was taking at least half the normal full-time work load for his or her course of study.Full-time student. A full-time student is a child who during some part of each of any 5 calendar months of the year was enrolled as a full-time student at a school, or took a full-time on-farm training course given by a school or a state, county, or local government agency. A school includes a technical, trade, or mechanical school. It does not include an on-the-job training course, correspondence school, or school offering courses only through the Internet.DougComment
-
A full time student is a student who is enrolled for the number of hours or courses the school considers to be full-time attendance. I have no idea what that may be. Probably varies among schools.
If the school in question considers 9 credit hours to be full time then ....
Also some things would depend on how many months student attended school.Comment
-
The original poster indicated that the student was not a full time student based on these credits. While some board members assume that other members of the board are not worthy of being considered "tax pros" I am assuming that the original poster understands the rules and is asking why the two packages are giving different results for identical situations.Originally posted by dan doshan View Post
I believe that there is some box unchecked (or checked) somewhere in the other package or that the situations are not really that much alike.Last edited by dtlee; 02-07-2012, 03:15 PM.DougComment
-
The definition of the term "full time" is one who was enrolled fulltime.A full-time student is a child who . . . was enrolled as a full-time student.
So, what is fulltime? Yes, as defined by the school.
And how does the school document that definition? By checking the box on Form 1098-T that says "At Least Half Time."Comment
-
The rule for a dependent being a full-time student under age 24 predates both the updated Kiddie Tax Rules and the education credits. The 1098-T is used as backup documentation for whether or not a student is or is not at least half-time, not whether or not the student is considered ful-time. Occassionally, when a taxpayer is unclear, I have actually called a school and asked if the number of credits taken are considered full-time or not. This is needed to determine whether or not the parent can claim the child and that determines who can claim the credit.Originally posted by BP. View Post
You cannot assume that a student who is at least half time is by definition full time. The question is whether the school considers the student to be full-time or not. Each school defines it themselves.
I know of no school that defines full-time as being at least half-time.Last edited by dtlee; 02-07-2012, 03:24 PM.DougComment
-
I do too!Originally posted by DONNA ASTON View Post
Just had one few days ago. Mom, Dad (no earnings) & 5 dtrs live together, with Mom's wages of $65,000; 20 y.o. college dtr one of the five (and the only dtr with income); she earned $20K. She claimed herself and the refundable AOC, as she provided over half her support.Comment
-
OK, I see your distinction. But just in terms of the AOC, does this mean there are two different enrollment definitions - one for the non-refundable portion and another for the refundable portion?Originally posted by dtlee View Post
Because eligible students for AOC must be at least half time as defined by the school and as evidenced on the 1098-T, which says for that particular box, that "if at least half time . . . you meet one of the requirements for the AOC." (AOC workload requirement is deemed met.)
Do we need to look for an extra level of workload if refundable AOC under 24?Comment
Comment