Can I claim college or education expenses if my parents paid for them?

[ja2001]

This question has been asked, but the answer is not clear.

My parents did NOT claim me as dependent.

I have some internship $s that I earned that I have W2. I have 1098 from my college.

Can I get credit in my tax filing ?

[Hal_Al]

Q. Can I claim college or education expenses if my parents paid for them?

A. Simple answer: yes. Although the general rule, in taxes, is that you must be the one making the payment, to get the deduction or credit, there is an exception for education.

Q. Can I get credit in my tax filing?

A. Yes, if you otherwise qualify.  The fact that your parents paid the expenses does not disqualify you.

But, other factors may disqualify you.  You say your parents did not claim you as dependent. But, if they could have claimed you as a dependent,  you would be disqualified  for the refundable portion of the most generous education credit (the American Opportunity Credit), unless you are over age 23.   If your parents forego claiming you as a dependent (when they are allowed to claim you), you are only eligible for a non refundable credit.  That is, you only get enough credit to reduce your actual tax liability, if any. The credit is worth up to $2500.  Essentially, if your W-2 is less than $12,950, you will not get any credit and your parents will lose the $500 other dependent credit.  If you are claimed as a dependent, on their return, they can claim the education credit of up to $2500  (unless their income is too high to qualify). 

[NCperson]

@Hal_Al - can you please help me out with your response? 

 I thought that AOTC is the unique case where whether someone can claim the taxpayer (the student)  and didn't was immaterial to whether the student was eligible for the refundable portion of the credit.

Rather, if the student is not claimed by anyone else (even if they could be), the Student is NOT eligible for the refundable credit if: a) under 24 and earned income < ½ of support, and b) at least one parent alive and c) not filing MFJ.... otherwise, the student is eligible for the refundable credit. 

thanks!

[Hal_Al]

@NCperson  good catch, thanks.  I was trying to say that, as most students who qualify as a dependent, are under 24.  Of course, if the student qualifies as a dependent, he does not meet the support test. But my answer was poorly worded. I have revised it.

There's a new urban myth among college students that says they can get a $1000 from the government just for filing a tax form. For most of them, they simply aren't eligible. A full time unmarried student, under age 24, even if you don't qualify as a dependent, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working (unless he's an orphan). You cannot be supporting yourself on parental support, 529 plans or student loans & grants. It is usually best if the parent claims that credit. 

[NCperson]

@Hal_Al - I appreciate you are quite the expert on this educational topic, but I will be a little "anal" and "nit picky" never-the-less. Apologies in advance. 

• "don't qualify as a dependent" - the student could qualify as a dependent, but the taxpayer (normally the parents) chooses not to claim the student.  so shouldn't the paragraph instead state "not claimed by anyone else"?
• "parental support" - that isn't the criteria unless the reason for no parental support is that they both are deceased!!.  (my parents may choose not to support me but are alive!!!).  The requirement is that if at least one parent is alive  that is a criteria that can eliminate eligibility.  I could be under 24, 100% supported by my aunt and uncle (who don't claim me), my parents are deceased and I am single and I would be eligible for the refundable credit. - see my point?

There are 3 criteria I mention above, which creates 8 permutations.  Seven of the permutations maintains the student's eligibility for refundable AOTC (assuming no one claims them).  It's that 8th permutation ( a) under 24 and <50% of support AND b) at least one parent is alive AND c) not filing MFJ) that eliminates refundable eligibility.

I always believed that Congress and the IRS created this requirement so that parents who make over $180,000 and therefore were not eligible for AOTC did not try to circumvent the rule by not claiming their college student so that the college student could claim the refundable credit.  However, I suspect at least 95% of college students are a) under 24 and provide less than 50% of their own support AND at least one parent is alive AND are not married.  So the IRS figured out a way to keep most all from circumventing the $180,000 income cap on eligibility for the credit. 

I've learned a lot from your posts as this whole educational area is quite confusing, but can really be explained quite simply. 

thanks again,  

[Hal_Al]

@NCperson  I agree with your analysis, particularly "this whole educational area is quite confusing" given the  "8 permutations". I occasionally insert the phrase "and is not an orphan" in my replies.  

In the poster's situations, he specifically mentions the parents, so I didn't think it was necessary to mention the other exceptions.  But, I should have covered the possibility that he was over 23.  

[ja2001]

Thanks for the responses so far.

My parents' income is high and they do not get any benefit from claiming me as a dependent.

I earned a bit this year (not anywhere close to 50%+, but just $6K).

My parents paid for my tuition

They already filed their taxes without claiming me as a dependent (first year as I earned something this year)

I have to file my taxes for the $6K I earned. Can I claim "anything" for the education expenses ? which is high $50K+

Thanks

[Hal_Al]

@ja2001  The answer depends on your age,  student status, marital status, and the source of your income.

Assuming, you are under age 24, not married filing a joint return, a full time student, and your $6000 was income on a W-2, you do not qualify for an education credit. 

A full time unmarried student, under age 24,even if you don't qualify as a dependent, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working (more than half his support comes from his own earned income). 

If no one claims you as a dependent, you would be eligible for a non refundable credit.  But, with only $6000 of earned income, you would not have any tax liability to offset. So, a non refundable credit does you no good.

[Hal_Al]

@ja2001  Why are your parents not claiming you this year?  They may be missing out on a $500 dependent credit. 

The fact that you "earned something this year" does not disqualify you as their dependent.  

There are two types of dependents, "Qualifying Children"(QC) and Other ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test.

A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:

1. He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled
2. He did not provide more than 1/2 his own support. Scholarships are excluded from the support calculation
3. He lived with the parent (including temporary absences such as away at school) for more than half the year

Furthermore, there is a rule that says IF somebody else CAN claim him as a dependent, he is not allowed to claim himself. If he has sufficient income (usually more than $12,950), he can & should still file taxes. In TurboTax, he indicates that somebody else can claim him as a dependent, at the personal information section.  TT will check that box on form 1040.

Even if he had less, he is allowed to file if he needs to get back income tax withholding. He cannot get back social security or Medicare tax withholding.

https://ttlc.intuit.com/community/dependents/help/when-do-i-have-to-answer-yes-to-being-claimed-as-a...

With the tax law change, effective 2018, most dependents will get the same refund whether they claim themselves or not. The personal exemption has been eliminated and the standard deduction increased.