Can I claim my college student child as dependent and at the same time, can she file her own taxes in order to report her income and college expenses? She would mark on her return that she is being claimed by someone else …
Yes, you can claim her if she marks the box that someone else can claim her. If she is a dependent on your return, you would report her 1098-T.
Q. Can I claim my college student child as dependent and at the same time, can she file her own taxes in order to report her college expenses and income ?
A. No.
Yes, you can claim your child as a dependent, even though she is filing a separate return, as long as she marks on her return that she is being claimed by someone else.
But, if she wants to claim the tuition credit, you will have to forego claiming her as a dependent, in order to allow her to claim that. Dependents are not allowed to claim the credit. She still marks that she CAN be claimed as a dependent, but in TurboTax she marks that she will not actually be claimed (that doesn't show on the actual tax form 1040).
While technically there is a provision that allows your student-dependent to claim a federal tuition credit, from a practical matter it seldom works out. A full time student, under age 24, is only eligible for the refundable portion ($1000) of the American Opportunity Credit (AOTC) if he/she supports himself by working. She cannot be supporting herself on student loans & grants and 529 plans and parental support. It is usually best if the parent claims that credit.
If the student actually has a tax liability, there is a provision to allow him to claim a non-refundable tuition credit. But then the parent must forgo claiming the student as a dependent, and the $500 other dependent credit. The student must still indicate that he can be claimed as a dependent, on his return. This is worth up to $2500 (AOTC shifts to all non refundable)
Thank you so much for your reply.
My daughter (22 yrs old) received a grant for school which so far has covered all her college tuition. By entering just her income on the tax return, it shows that she will be getting a refund. She lives at home. Therefore, would it be better for me as parent to claim her as a dependent and report her 1098-T and college expenses (text books, computer, transportation) on my taxes so I can claim the AOTC as well as the credit I would get for her being my dependent?
She would be filing her own return just to report her income …
Would it be better for me as parent to claim her as a dependent and report her 1098-T and college expenses (text books, computer, fees) on my taxes so I can claim the AOTC as well as the credit I would get for her being my dependent?
A. Yes. You cannot count transportation or room & board when calculating the AOTC.
Q. "My daughter (22 yrs old) received a grant for school which so far has covered all her college tuition." So. I can't count tuition for the AOTC, right?
A. Maybe not. There is a tax “loop hole” available to claim an education credit, for the parents of students on scholarship. The student reports all his scholarship, up to the amount needed to claim the American Opportunity Credit (AOC), as income on his return. That way, the parents (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship. You cannot do this if the conditions of the grant are that it be used to pay for qualified expenses.
Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.
Books and computers are also qualifying expenses for the AOC. So, extending the example, the student had another $1000 in expenses for those course materials, paid out of pocket. She would only need to report $5000 of taxable scholarship income, instead of $6000.
The IRS actually encourages use of this technique. From the form 1040 instructions: “You may be able to increase an education credit if the student chooses to include all or part of a Pell grant or certain other scholarships or fellowships in income. For more information, see Pub. 970, the instructions for Form 1040 and IRS.gov/EdCredit". PUB 970 even has examples of how to do the “loop hole”.
Thank you again for the detailed response.
Yes, basically. But it's not clear where the $5000 comes from. Was there suppose to b some info at "spoiler".
What is boxes 1 and 5 of her 1098-T. How much other expenses (books & a computer, but not room & board) does she have? What other income does she have? Id your tax liability $1500 or more (so that you get the full $2500 AOTC).
The $5,000 comes from the example:
Books and computers are also qualifying expenses for the AOC. So, extending the example, the student had another $1000 in expenses for those course materials, paid out of pocket. She would only need to report $5000 of taxable scholarship income, instead of $6000.
Box 1 $12,511
Box 5 $6,413
There’s no info at spoiler.
She has additional income from working and school expenses such as: books, laptop. Approx $1,300
Do you have box 1 and box 5 backwards?
If box 1 is $12,511 and Box 5 $6,413, her grant does not "cover all her college tuition". So, you have plenty of expenses to claim the AOTC without using the "loop hole".
Hello,
Yes the amounts in the boxes are correct. Therefore, it sounds that it would be better for me as a parent to claim my daughter as a dependent and claim all her college tuition and expenses and separately she just files her return with her income and marks that she can be claimed by someone else?
Q. Therefore, it sounds that it would be better for me as a parent to claim my daughter as a dependent and claim all her college tuition and expenses and separately she just files her return with her income and marks that she can be claimed by someone else?
A. Yes.
Can I claim my college student if I'm claiming head of household while she files separately?
Q. Can I claim my college student if I'm claiming head of household while she files separately?
A. Yes.
In TurboTax (TT), he indicates that somebody else can and will claim her as a dependent, at the personal information section. TT will check that box on form 1040.
With the tax law change, effective 2018, most students will get the same refund whether they claim themselves or not. The personal exemption has been eliminated and the standard deduction increased.