Student Claiming the American Opportunity Education Credit

[jrumbold]

The Taxbook Deluxe Edition says in the table on page 12-3 that if a taxpayer (parent) does not claim the student as a dependent ("even if entitled to claim"), then no matter who pays the education expenses, only the student can claim the education credit. I can't seem to get this to happen without violating the "Someone can claim: You as a dependent" checkbox on page 1 of 1040. Without this box checked, the student gets the AOC refundable credit of $1,000 as well as the Recovery rebate credit of $1,400. However, I have had it pounded into me over the years that this box must be checked if the parent provides more than 50% of support and otherwise meets the criteria to claim the person as a dependent.

So, can somebody enlighten me about this and provide a citation to the code or regs that allows me to violate the checkbox on the 1040? BTW, the parents earn too much money to claim the AOC.

[rbynaker]

Definitely check the box.

If the student has income resulting in an income tax amount, that tax can be reduced by AOTC if the parents do not claim them. That what TTB is alluding to.

It takes a rare alignment of stars for the AOTC to be refundable though. The student would need to have earned income in excess of 50% of their support for the AOTC to be refundable. I've heard about these unicorns but I've never seen one. Refundable AOTC follows the kiddie tax rules.

Rick

[tpert]

You probably need to call your software vendor to identify how to claim only the nonrefundable portion.

You must check the box to indicate that the taxpayer is able to be claimed, but somewhere you need to indicate that the taxpayer is eligible for the nonrefundable portion because the taxpayer was not claimed.

[jrumbold]

Thank you Rick. I have received this citation from Bec Johnson with the Taxbook:
The citation for the case of a dependent claiming the education tax credit is Regulation section 1.25A-1(f).
(f) Claiming the credit in the case of a dependent -
(1) In general. If a student is a claimed dependent of another taxpayer, only that taxpayer may claim the education tax credit for the student's qualified tuition and related expenses. However, if another taxpayer is eligible to, but does not, claim the student as a dependent, only the student may claim the education tax credit for the student's qualified tuition and related expenses.
(2) Examples. The following examples illustrate the rules of this paragraph (f):

[kathyc2]

In Pro you answer yes to can someone claim you and no to did they claim you. Different software may handle it differently.