AOC refundable credit

[JenMO]

Why does a parent being alive for a student under 24 become a reason not to get the refundable part of the AOC?

[taxmandan]

The student is a dependent on the parents' return? If the student isn't, but should be, then the student is not entitled to the AOC since they can't claim their own exemption if someone else should be claiming them (parents) but did not do so.

[dtlee]

Why does a parent being alive for a student under 24 become a reason not to get the refundable part of the AOC?

This only part of a three part rule which is the same rule as a child subject to the Kiddie Tax. If the child is someone who may be liable for the Kiddie Tax, they are also excluded from the refundable portion of the credit.

See this flowchart I built:

http://temp.nytaxexpertsorg.officeli...CFlowchart.pdf

[ddoshan]

Why does a parent being alive for a student under 24 become a reason not to get the refundable part of the AOC?

The AOC rules piggybacks on the Kiddie Tax Rules which now have that as one of the rules as part of the criteria as to if the Kiddie Tax Rules apply. About as clear as mud.

[Lion]

Chart

Thanx for sharing your chart, Doug. Visual helps!

[JenMO]

My kid, under 24, is MFJ, support themselves, could have refundable AOC, but his mother is still alive. Does this knock him out?

[ddoshan]

It would appear so. See the chart posted by dtlee.

[dtlee]

My kid, under 24, is MFJ, support themselves, could have refundable AOC, but his mother is still alive. Does this knock him out?

I do not see how having the mother alive knocks him out.

[Lion]

Eligible

According to the chart, when you follow the earnings more than half his support arrow, her son would qualify for the refundable portion of AOC. Now, maybe I'm misreading her info re her son; she didn't say he earned any money, maybe supported himself off investments or loans...

[JenMO]

My flow on the chart says refundable, but according to instructions on the living parent, how would any student with a living parent get refundable AOC?
Looking at the chart, it looks as though a taxpayer who is not a full time student is eligible(following the arrows) I'm confused.

[dtlee]

According to the chart, when you follow the earnings more than half his support arrow, her son would qualify for the refundable portion of AOC. Now, maybe I'm misreading her info re her son; she didn't say he earned any money, maybe supported himself off investments or loans...

As I read the post, the status of the student is MFJ.

Even if we miss the support question and the living parent test, I do not understand how the joint return part fails to make the student eligible.

[BP.]

See this flowchart I built:

http://temp.nytaxexpertsorg.officeli...CFlowchart.pdf

Thanks!

[dtlee]

My flow on the chart says refundable, but according to instructions on the living parent, how would any student with a living parent get refundable AOC?
Looking at the chart, it looks as though a taxpayer who is not a full time student is eligible(following the arrows) I'm confused.

You are correct.

Someone who is at least half time is eligible for the credit and if they are not full-time, they are not subject to the Kiddie Tax (and thus by not being subject to the Kiddie Tax, they are eligible for the refundable portion of the AOC). See §1(g) in the code.

If you are under 19, you do not need to be a full time student to be subject to the Kiddie Tax (and thus you are ineligible for the refundable portion of the AOC based on age). However, those age 19 through 23 must be full-time students to be subject to the Kiddie Tax (and likewise ineligible for the refundable portion of the AOC).

The instructions use lots of "ands" and "ors" and they are proceded by a "not" so you need to be careful how you read the instructions. There are three things:

1. Age/Student Status/Earnings
2. Living Parents
3. Not Filing Jointly

You must meet all three of these to be ineligible. However, the problem is trying to read all the ands and ors in the first item. However, you say your student is filing jointly, so I don't understand why you need to look at the first two.

[ddoshan]

Sorry about my post ... it would appear so ... I actually meant to indicate the opposite that it would appear that he would be eligible for the refundable portion.