560890
My dependent son attended first year college and the box2 1098T "billed" box was only filled out. $3990. He has a loan on this to pay back over time. As parent TT is giving me the American Opportunity credit . I haven't paid any thing out of pocket but am reaping the credit. ( fine, but want to be sure ) . He can't claim because he's a dependent. So it appears to me this is legit right. ( note even though I don't pay tuition on him , I am paying room, board at my home ( he commutes) his gas, car , insurance etc etc. So I see in a way I should get credit for this. Do you concur?
Note I've read that Loans are equivalent to act of paying--otherwise the credit would be lost if based on cash payments ( i.e. paying princ & Interest for next 7 years after graduation - you can't claim then because your not attending anymore. You see the code and many independent articles are silent on this point and just focus on "paid,paid,paid" . Don't comment on the parent getting the credit and don't comment on the fact that a loan was used which is the majority of how college is paid for.) Thank you in advance for any input.
You'll need to sign in or create an account to connect with an expert.
Yes, you are entitled to the AOTC for your dependent. Please see below for more detailed explanation from the IRS.
With regard to student loans: expenses paid with borrowed funds are "deemed paid" by the borrower. Even payments made with a credit card would count. The source of funds is not important; it is the act of paying the tuition and fees during the tax year that matters, even if you have incurred a debt to a third party.
The following guidance for the American Opportunity Tax Credit is taken from IRS Pub. 970 Tax Benefits for Education. Identical provisions exist for the Lifetime Learning Credit.
"If there are qualified education expenses for your dependent during a tax year, either you or your dependent, but not both of you, can claim an American Opportunity Credit for your dependent's expenses for that year.
For you to claim an American Opportunity Credit for your dependent's expenses, you must also claim an exemption for your dependent. You do this by listing your dependent's name and other required information on Form 1040 (or Form 1040A), line 6c.
Expenses paid by dependent. If you claim an exemption on your tax return for an eligible student who is your dependent, treat any expenses paid (or deemed paid) by your dependent as if you had paid them. Include these expenses when figuring the amount of your American Opportunity Credit.
Expenses paid by you. If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring the amount of the American Opportunity Credit. If neither you nor anyone else claims an exemption for the dependent, only the dependent can include any expenses you paid when figuring the American Opportunity Credit."
Still have questions?
Questions are answered within a few hours on average.
Post a Question*Must create login to post
Ask questions and learn more about your taxes and finances.
unclesamiamnot
New Member
tim_gallagher
Returning Member
ningji
Level 2
emuehle
Level 2
Smithy4
Level 2