Education Credits and Divorce Decree

[KC-CPA]

Client came in all worried about previous years tax returns because she (wife) read a tax tip that stated - if divorce decree states that education expenses must be covered and paid by ex (husband) then she can not take the education credit even if she or the student paid for it and is a dependent on her return. anyone else heard of such a thing? - I hope not.

Did I miss something or mess a return up? I have always used the tax rules that if the student is a dependent then the parent can take the education credit.

[KBTS]

You are correct - the education tax benefits belong to the parent claiming the exemption.

[Bonnie]

But the student is being claimed by the mother the way I understand this

[KC-CPA]

yes, the mother has the student on her return and takes the education credit

[taxea]

IRS regulations trump divorce court orders. She takes it because she takes the dependent. She should take him to court for violation of court order if he is not paying the tuition as ordered.

[ttbtaxes]

It's irrelevant who paid the tuition. It could have been paid by the 3rd cousin twice removed. The education credits belong to the person who is entitled to claim the student as a dependent.

[Gary2]

It's irrelevant who paid the tuition. It could have been paid by the 3rd cousin twice removed. The education credits belong to the person who is entitled to claim the student as a dependent.

To be absolutely precise, they belong to the person who actually claims the student's exemption; there are times when more than one person is entitled. However, if no one claims the student's exemption, then the student is allowed to claim the AOC (but is unlikely to qualify for the refundable part), even if the student isn't allowed to claim their own exemption.

[ddoshan]

To be absolutely precise, they belong to the person who actually claims the student's exemption; there are times when more than one person is entitled. However, if no one claims the student's exemption, then the student is allowed to claim the AOC (but is unlikely to qualify for the refundable part), even if the student isn't allowed to claim their own exemption.

Very precise and well put.

[mactoolsix]

Dependent can't claim AOC . . . . ?

"even if the student isn't allowed to claim their own exemption."

From Pub 970:

Who Cannot Claim the Credit

You cannot claim the American opportunity credit for 2012 if any of the following apply.

#2.) You are listed as a dependent on another person's tax return (such as your parents'). See Who Can Claim a Dependent's Expenses , later.

Since a dependent can not claim an exemption, I fail to see how the dependent student can claim AOC.

Did I miss something?

Mike

[Gary2]

From Pub 970:

You cannot claim the American opportunity credit for 2012 if any of the following apply.

#2.) You are listed as a dependent on another person's tax return (such as your parents'). See Who Can Claim a Dependent's Expenses , later.

Since a dependent can not claim an exemption, I fail to see how the dependent student can claim AOC.

Did I miss something?

Yes, there's a distinction between being a dependent and being "listed as a dependent." If you continue, as directed, to the "Who Can Claim a Dependent's Expenses" section, you'll find a two by two table that makes this clear.