Can Dependant Child claim AOTC by filing separately as single if parent income is high ?

[bluemax786]

Hello,

Due to high income, AOTC cannot be claimed by parents who are filing jointly. 

So can my college going child file separately to claim the refundable $1000 AOTC in 2021

if we don't claim him as a dependent on our return ?

We will lose $500 dependent credit but our child stands to gain $1000 by filing separately.

Our child has no income, fulltime student, we provide more than 50% of the support and paid his tuition.

But somewhere I read AOTC cannot be claimed if the child does not provide more than 50% support

and this credit is only meant for parents/guardians who pay for these expenses.

Reading thru 8863, Pub 970 chap 2 , our child fulfills all the requirements and is eligible for AOTC credit.

Please advise if our child can file separately to claim $1000 refundable credit if we choose to not include him as our dependent ?

Who Can Claim a Dependent's Expenses?

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.

IF you...	THEN only...
claim on your tax return a dependent who is an eligible student	you can claim the American opportunity credit based on that dependent's expenses. The dependent can't claim the credit.
don't claim on your tax return a dependent who is an eligible student (even if entitled to claim the dependent)	the dependent can claim the American opportunity credit. You can't claim the credit based on this dependent's expenses.

[ColeenD3]

It's not as simple as that. There is a common idea that a parent can decide not to claim a dependent so that they can reap certain benefits. The truth is, a qualifying child or a qualifying relative is your dependent.

While the IRS never comes out and says that you must claim a dependent, they do give the definition of who is a dependent.

The term “dependent” means:

• A qualifying child, or
• A qualifying relative.

While you can choose not to claim your dependent, the qualifying person MUST indicate on his own return that he is a dependent, but that no one will actually claim him as such.

In TurboTax Online, the questions read:

Someone else can claim me as a dependent on their tax return. The dependent would answer yes.

And this person will claim me on their 2021 tax return. The dependent would answer no.

Sometimes a parent will not be able to take advantage of an Education Credit and will forgo claiming the dependent so that they can get the credit. This will not necessarily work out. A student, under the age of 24, must have a tax liability in order to claim the non-refundable portion of the credit.

When using the ITA that the IRS provides, you can be told that you are eligible, but can't take the refundable portion in any of the following circumstances.

You are eligible to claim the American Opportunity Credit.

However, you cannot claim any part of the American Opportunity Credit as a refundable credit on your tax return since:

• you were over age 18 and under age 24 at the end of 2021,
• you were a full-time student,
• your earned income was less than one-half of your support,
• at least one of your parents was alive at the end of 2021, and
• you are not filing a joint return.

[bluemax786]

Thank you very much Coleen for providing a very clear and definitive response.

It is very clear now.  A fulltime student having less or no earned income who cannot provide 50% or more  support cannot claim refundable credit for AOTC by filing a self return.

Appreciate your guidance.

Support includes amounts spent to provide:

• Food,
• Lodging,
• Clothing,
• Education,
• Medical and dental care,
• Recreation,
• Transportation, and
• Similar necessities.

This information is found in Publication 501, Dependents, Standard Deduction, and Filing Information.