Can I claim the Hope Scholarship Credit as a Student?

[Kevlar00]

I'm 21, I pay for all my expenses, but I'm still technically a,'dependent' student because I'm not armed forces, a parent etc.

My father didn't claim the Hope Credit (I can' t remember the name of its successor) or me as a dependent. Can I claim the Hope Credit and get some of my tuition back?

[Hal_Al]

Q. Can I claim the American Opportunity Credit  (successor to the Hope  Credit) as a Student?

A.  No.  If you qualify as a dependent, you are not eligible for the  American Opportunity Credit (AOC).

Even if you don't qualify as a dependent, there are further restrictions on a student under age 24 qualifying for the AOC.  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. You cannot be supporting yourself on parental support, 529 plans or student loans & grants. You usually must have actually paid tuition, not had it paid by scholarships & grants.  It is usually best if the parent claims that credit. 

[Kevlar00]

Thank you for your answer.

I pay for college through a combination of scholarships, loans, and working myself. A significant portion, although I can't remember exactly how much, of my tuition is covered directly by my paycheck. Am I still ineligible?

[Hal_Al]

It's complicated.  You have to do the math.   There are two support calculations to be done:

1. you must have provided more than half your own support,  by any means, to not qualify as a dependent.  Scholarships (and what they pay for) are ignored in that  support calculation. 

2. Since you are under 24, you must have provided more than half your support, with earned income (working), to qualify for the refundable portion of the AOC.  Scholarships are part of that calculation, but are not earned income. Scholarships are treated as outside support, not your own support. 

 If your parent co-signed the loans, the loan money is considered parental support.  Other wise, it is considered your own support.  But it is not considered earned income.

There are two types of dependents, "Qualifying Children"(QC) and standard ("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

The support value of the home, provided by the parent, is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants.

The IRS has a worksheet that can be used to help with the support calculation. See: http://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf

[Kevlar00]

Hey Hal, sorry to get back to you late.

So to clarify, does tuition expenses count toward the support I have to cover with Earned Income? And federal loans, which aren't co-signed, don't count toward the half of my,'support' I have to cover?

[Hal_Al]

Q. So to clarify, does tuition expenses count toward the support I have to cover with Earned Income? 

A.   I have not found a clear answer. What is clear is that tuition paid by scholarships does not count as support, for the dependency test (whether a student  can be claimed as a dependent). 

I can find no similar reference for the earned income rule (kiddie tax and AOC qualifying) .  Lacking such a written statement, I'm of the opinion that tuition does count as support you have to cover and scholarships count as support provided by others, not by you.

At lest one other TT "Champ" is of the opposite opinion; Scholarships are ignored for the support by earned income test, as well (kiddie tax and AOC )

Q. And federal loans, which aren't co-signed, don't count toward the half of my 'support' I have to cover?

A. Yes.  Co-signed loans count as support provided by your parents (if they were the co-signer).  Even a loan that was only in your own name, would not be earned income.