Education AOTC

[Douparr]

My daughter did not file 2018 taxes but received a 1098-t for 2018. Can she use her 2018 1098-t on her 2019 tax return? She graduated July 2019 and now has employment. The 1098 t is tuition expense only, she did not receive any scholarships. Thanks

[Hal_Al]

Q. Can she use her 2018 1098-T on her 2019 tax return?

A. No. But she can still file her 2018 return and claim the credit.

That assume several things:

1. That, counting 2019, the AOTC has not already been claimed 4 times on her education, by either her or you (the parent). Since college usually takes 5 tax/calendar years, that's probable.

2. She did not qualify as your dependent in 2018.  That's unlikely if she didn't have enough income to have to file a return. 

3. Mos students are not eligible for the refundable portion of the AOTC.  A full time unmarried student, under age 24, 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. 

[Hal_Al]

Graduation year

Q. Can your child still be your dependent in the year he/she graduates from college?

A. If he was a student (under 24) for at least 5 months and lived with you for more than half the year, and did not provide more than 1/2 his own support for the whole year, you can still claim him. Be sure he knows you're claiming him, so he doesn't claim himself. He can only be claimed once. But, he can "file taxes" without claiming his own exemption.

The real question is who should be claiming him in this "transition" year to adulthood. You two have to agree on who is going to claim his exemption. Each should do their taxes both ways and see which way the family comes out best.  Even then, you have to meet the rules. The rule is that a child of a taxpayer can still be a “Qualifying Child” dependent, regardless of  his income, if:

1. he is a full time student under 24 for at least 5 calendar months of the year (graduating in May usually means you meet the 5 month rule)
2. he did not provide more than 1/2 his own support  (scholarships are considered 3rd party support and not support provided by the student). 
3. lived with the parent (including time away at school) for more than half the year

So, it usually hinges on  "Did he provide more than 1/2 his own support in 2019.

The support value of the home you provided is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants. IRS Publication 501 on page 20 has a worksheet that can be used to help with the support calculation. See: http://www.irs.gov/pub/irs-pdf/p501.pdf

If he has already filed one way, he can file an amended return, going the other way.