Daughter Medical School -1098T

[manuel7511]

My daughter is a second-year medical student. We paid some of her tuition for the year 2023. She is 24 years old and has no income, can I deduct all the expenses when we file our taxes this year? What are the tax credits and benefits I can use? Thank you for all who will response.

[Hal_Al]

If she qualifies as your dependent, and you claim her, you can claim her educational expenses for the Lifetime Learning Credit (LLC). It is 20% of tuition paid, up to $10,000 ($2000 maximum tax credit).  It is a non refundable credit (it can only help reduce your tax liability). 

At age 24, she no longer qualifies as a dependent under the qualifying child rules. 

A person can still be a Qualifying relative dependent, if not a Qualifying Child, if he meets the 6 tests for claiming a dependent:

1. Closely Related OR live with the taxpayer ALL year
2. His/her gross taxable income for the year must be less than $4700 (2023) ($4400 for 2022).
3. The taxpayer must have provided more than 1/2 his support
4. He must be a US citizen or resident of the US, Canada or Mexico
5. He must not file a joint return with his spouse or be claiming a dependent of his own
6. He must not be the qualifying child of another taxpayer

The Other dependent (qualifying relative) credit is worth (up to) $500 per dependent and is also non-refundable.  

[manuel7511]

Thank you for the quick reply. I saw an article that I can report the expenses as a gift using the form 709. Not sure how to do this. Thank you again

[Hal_Al]

Q.  I saw an article that I can report the expenses as a gift using the form 709. Not sure how to do this?

A. What is it you're trying to do? Asking if you "can" report it on form 709, makes it sound like you think there's some benefit to doing so. There isn't.  Tax benefits for education come only with filing a regular 1040 with form 8863, but only if she is your dependent.  

[EDIT] If she is not your dependent, YOU cannot claim anything for paying her tuition.  She can claim a tuition credit, on her tax return, even though you paid the tuition. But, it is a non refundable credit.  It will do her no good, if she doesn't have enough income to have a tax liability. 

Form 709 is something totally different*.  It has nothing to do with income tax and is file separately from a 1040 regular tax return. 

Paying your child's (dependent or not) educational expenses, is an exception to the gift tax form reporting requirement. No form 709 is required to be filed, in your situation. See: https://www.thebalance.com/what-gifts-are-not-subject-to-the-gift-tax-3505684   

*"Gift Tax" is somewhat of a misnomer.  Even though a gift tax return is sometimes required (but not in your case), very few people ever actually pay federal gift tax. The purpose of the gift tax return is usually only to document a reduction in the allowable estate tax exemption.
See https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Planning-and-Checklists/The-Gift-Tax-Made-Simple/...   

[Hal_Al]

If she is not your dependent, YOU cannot claim anything for paying her tuition.  She can claim a tuition credit, on her tax return, even though you paid the tuition. But, it is a non refundable credit.  It will do her no good, if she doesn't have enough income to have a tax liability.