For my daughter who is 21 yo full time student, her profile entry is : single, full time student , CAN be claimed as dependent . I am filing a for return as her income is above the threshold required to file.
For some reason, either I entered something wrong but Turbo tax is showing she qualifies for an education credit. I thought that because she CAN be claimed as a dependent on another tax return, she won't be able to claim that credit. But Turbo Tax is showing that she qualifies for the Lifetime Learning Credit
Did I enter something wrong somewhere?
I don't plan to claim the education credit due our income restriction.
1. Do I have to claim her as a dependent if I don't qualify for child credit and education credit?
2. Can she still qualify for the education credit as shown on her return despite her putting down that she CAN be claimed as a dependent?
Please advise
Thank you
Thank you for that!
" Yes, there is a little known option where a dependent student, if not claimed by the taxpayer, can get the nonrefundable portion of an education credit"
I am curious how Turbo Tax determines that no will claim the dependent student and automatically calculates that the student will qualify for the education credit?
You mentioned "little known option" is that something I have to select or it's automatically selected by the program?
Thanks for your input !
Q. I am curious how Turbo Tax determines that no will claim the dependent student and automatically calculates that the student will qualify for the education credit?
A. In the personal info section, she is asked Can she be claimed as a dependent. She answers yes. Then she is asked will she be claimed. She answers No. That qualifies her for the credit. Note: because you are not claiming her, you give up the $500 Other Dependent Credit, so she can get the non refundable tuition credit.
Q. You mentioned "little known option" is that something I have to select or it's automatically selected by the program?
A. It's automatic.
You don't say how much income she has. The AOTC is very generous and can wipe out all of her tax liability up to $2500.
Yes, there is a little known option where a dependent student, if not claimed by the taxpayer, can get the nonrefundable portion of an education credit.
If an education credit would not benefit you, and not claiming her does you no harm, she still files as a dependent, indicates that no one will claim her and enters the information relating to an education credit.
It works for either the American Opportunity Tax Credit or the Lifetime Learning Credit.
Again, a dependent student only gets the non-refundable portion, so it can lower the tax liability but not received as additional refund
Thank you for that!
" Yes, there is a little known option where a dependent student, if not claimed by the taxpayer, can get the nonrefundable portion of an education credit"
I am curious how Turbo Tax determines that no will claim the dependent student and automatically calculates that the student will qualify for the education credit?
You mentioned "little known option" is that something I have to select or it's automatically selected by the program?
Thanks for your input !
Q. I am curious how Turbo Tax determines that no will claim the dependent student and automatically calculates that the student will qualify for the education credit?
A. In the personal info section, she is asked Can she be claimed as a dependent. She answers yes. Then she is asked will she be claimed. She answers No. That qualifies her for the credit. Note: because you are not claiming her, you give up the $500 Other Dependent Credit, so she can get the non refundable tuition credit.
Q. You mentioned "little known option" is that something I have to select or it's automatically selected by the program?
A. It's automatic.
You don't say how much income she has. The AOTC is very generous and can wipe out all of her tax liability up to $2500.