Who gets the Education expense?

[Lion]

Divorced parents. Daughter lives with Mom four months and Dad three months and College and other temporary absenses five months. Mom refuses to sign Form 8332. So, Mom claims daughter for all five dependent-related items, right? But, Dad paid college tuition and took out a PLUS parent loan for college expenses. Can Dad claim tuition expense? Can Dad claim college loan interest deduction? If not, who can? Daughter? Mother who paid $0? No one? (Divorce decree was written under prior law when support determined who claimed dependency, so assumed Dad could claim Daughter for four years while in college.)

[Safire]

It has always been my understanding that the education expenses always go with the dependent exemption. Not sure if that has changed with all these new definitions or not.

I have to say that I disagree with the IRS taking a position that goes against what 2 people have agreed to in court as to who gets to claim a child as a dependent. It's hard enough sometimes to get people to go along with court orders, now they have a valid reason for going against them in certain cases. It gives me a headache thinking about the whole thing.

[jainen]

Prior law has not changed

Prior law has not changed for determining who is the custodial parent. If the daughter lives with mother who won't sign Form 8332, the father never had the right to claim the exemption. His 3rd-party tuition payments are considered to be paid by the student and the credit can be taken by the mother if she claims the exemption or the student otherwise.

If your client is the father, I would pull out a calendar and count the days the daughter was in each home, and think really hard about who should get credit for the temporary absences at school.

If your client is the mother, advise her that the issue is the girl's schooling, not some tax benefit. It's pretty shabby to use tax issues this way. Paying for college is a horribly difficult thing and she should do everything she can to help it go smoothly. Whatever her own marital problems, she shouldn't take it out on the girl. Sign the 8332 already.