Tuition Credit - Borrowed Money

[buzzardbreath]

I'm sure this has been covered before but I need to ask again...

Tuition and books are being paid from the proceeds of a student loan...Loan is in the name of the student, and of course terms begin repayment after student leaves college.

Does the answer change if a parent co-signs the loan??

[DaveinTexas]

I didn't see a question

but I will play. The Tuition paid can be claimed by the Parent for the Deduction or the Credit if the student qualifies (#1) and whether or not the tuition is paid for by the parent, the student or the student's grandmother as long as the student qualifies to be a dependent on the taxpayer's return (#2).

Or are you asking if the parent can deduct the student loan interest paid by the dependent if the parent is not liable for the loan?

[buzzardbreath]

Tuition credits only

Thanks Dave, didn't realize I failed to coalesce into a question, but you picked up on what I needed and answered.

Much obliged...

[DaveinTexas]

You bet

Man, I need to get back up to TN. I went fishing years ago with my Dad and brother; Reelfoot Lake in Northwest TN. Great times, I saw a couple of bald eagles in the wild for the first time; beautiful place.

Oh, last but not least, you need to really make sure the client provides you with the 1098-T before you file the return. Also, make sure you tell the client to retain receipts for books, if claiming the AM Opp Credit. I would bet that I had at least 5 or 6 CP2000s regarding this credit (mismatch of figures). I realize that books don't appear on the 1098-T but some of the CP2000s flatly denied the credit even thought the 1098-T was correct.

Just my 2 cents.

[Snaggletooth]

TN - Off Topic

Man, I need to get back up to TN. I went fishing years ago with my Dad and brother; Reelfoot Lake in Northwest TN. Great times, I saw a couple of bald eagles in the wild for the first time; beautiful place.

Dave, you really do need to come back. You were probably told Reelfoot was caused by a titantic earthquake in 1802 which opened up the basin, and caused the Mississippi River to flow backward to fill the lake. Next time, continue eastbound, as (in general) the state becomes more scenic the further east you go. Send me a private message and I will provide you with a travelogue, steering away from the many tourist traps.

My favorite area is the media-battered Appalachia, where you've heard on documentaries of the impoverished people living there. They live in breathtaking scenery, and are unexpectedly intelligent, hard-working, and are inborn with a sense of right and wrong that will make you stand up and take notice. There are many among them who live their lives with impeccable charm and grace. This area is not limited to TN but takes in all the states in southern Appalachia.

Much to be preferred to the stuffed-shirt environments of the larger towns. Let me hear from you if you're ever close to the center of Tennessee where I live.

[DaveinTexas]

Very nice gesture

Thanks my friend, and that was an exquisite description of your home State sir. I do remember, vaguely, the story of Reelfoot lake (naturally made lake). And, you are spot on with your advice, because every client I mention this to tells me to go further east to the "prettier" side of TN. What a majestic state, and no State Income tax to boot!

Heck if Dave Ramsey lives there, it must be a decent place to be! If I can just convince the wifey to go to TN instead of FL every year for vacation, I will take you up on your offer. My Father is in no shape to make the trip again but I know my brother would make the trip with me.

Thank you kindly.

[ttbtaxes]

Will the student qualify as a dependent on the parents' return? The education loan was taken in the name of the student so all funds paid therefrom are treated as provided by the student. Did the parents' provide at least the same amount in support?

Nowadays, education can be paid from a child's UGMA account, 529 account and/or momey borrowed in the name of the child. It is very easy for the child not to be a dependent on a parents' return these days.

[buzzardbreath]

Remains to be seen

Haven't had this particular appointment yet, so this remains to be seen. Knowing the family, my guess is the student(s) will qualify as I doubt anyone has the foresight to set aside separate funding.