Education Credits

[mrbill]

"I passed the test, but I don't have all the answers"

Client has a 26 year old daughter, who is in a graduate nursing program. She has completed 4 years of undergraduate college. 2011 W-2 income was $300. No other income. 1098-T, box 2 lists $33,000 in tuition.
Parents cannot claim her (+age 24)
Student cannot take the AOC credit
Parents cannot take education deduction as she is not a dependent
Due to her low income, other education credits do not apply.

My read is to have the parents claim her as a dependent.
Any thoughts ?

[Gary2]

How did she pay $33K in tuition? If loans, then chances are she's supporting herself and her parents can't claim her.

[mrbill]

Education Credits

Thanks, Gary - Many, many loans. It just seems a waste that the family cannot receive benefit from $33k in tuition.

[FEDUKE404]

Up the proverbial creek

Thanks, Gary - Many, many loans. It just seems a waste that the family cannot receive benefit from $33k in tuition.

Well, the student can/could claim the credits herself....however.....

One would think there is more to this story as to how the student supports herself and/or who provides more than 50% of her support.

While there may be some hurdles to negotiate, if the student is getting $33k in loans to (apparently) pay for grad school, and she makes $300, something is missing from the picture here.

While the AOC is out (four-year etc) there are other education options to consider. I might go back and read some of the finer print. But as you noted, with essentially no income the education stuff is of no use to her although if the stars align perhaps something for the parents.

Good luck!

FE

[RitaB]

What?

Parents cannot claim her (+age 24)

Parents cannot take education deduction as she is not a dependent

My read is to have the parents claim her as a dependent.

Does this seem contradictory to anyone besides me? I mean, I'm tired, but, huh?

Parents can claim a kid who is 100 if the conditions are met.

[taxmom34]

right on RitaB. daughter could be qualifying relative

[dtlee]

right on RitaB. daughter could be qualifying relative

I agree with Gary2 and since the OP confirmed that the education was paid for with proceeds of student loans, based on the facts presented, the parents did not provide more than half of the support for the student and no one can likely claim this student as a qualifying relative dependent.

[Lion]

Support Worksheet

Do the support worksheet. In my area, by the time the parents pay the $2,500/month rent on the kid's CO condo and buy her a $28,000 AWD car and stock the freezer every visit and fly her down to FL on breaks to visit the family and grandparents and fly her back home to CT to visit her boyfriend and give her new ski equipment for her birthday and...they could be providing more than half their daughter's support. Have the parents work with you on the support worksheet to see how it comes out.

[dtlee]

Do the support worksheet. In my area, by the time the parents pay the $2,500/month rent on the kid's CO condo and buy her a $28,000 AWD car and stock the freezer every visit and fly her down to FL on breaks to visit the family and grandparents and fly her back home to CT to visit her boyfriend and give her new ski equipment for her birthday and...they could be providing more than half their daughter's support. Have the parents work with you on the support worksheet to see how it comes out.

Very true.

I have done a worksheet in a similar scenario only to discover "the car" (although I never found the condo).

[RitaB]

Why

I just thought the "can't claim" / "can too claim" statements in the OP sounded like me when I'm having one of those days. You know, those voices in my head have some pretty good ideas sometimes. Like that one I heard that said the kid's age is not important here.