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Education Credits for Refund

My son is a full time college student. This is the first year that he files tax return as an independent taxpayer. His return shows that he has a total deduction of $16,400 which includes a Standard Deduction of $12,000 and a Tuition and Fees of $4,000. It also shows that he has a credit of $1,800 from the Recovery rebate credit and this $1,800 becomes his refund. TurboTax shows that he is eligible for all 3 education credits. Should he get refund from the Tuition and Fees of $4,000 or the education credits? Thanks very much!

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1 Reply
Hal_Al
Level 15

Education Credits for Refund

It depends on how much income he has and the source of that income and his age.

 

It sounds like the $16,400 deduction got his taxable income to 0. So a tax credit would do him no good.

 

Generally, students under 24 are not eligible for the refundable portion  (up to $1000) of the American Opportunity 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. 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. 

You cannot claim a credit if you are, or can be, claimed as a dependent by someone else.

 

You may be missing out on the $2500 AOC plus the $500 dependent credit so that he can claim the $1800 recovery rebate credit.  

 

Under the CARES Act, if a person is claimed, or qualified to be claimed, as a dependent on someone else’s 2019 return he  did not receive a stimulus check, in 2020.   If he qualified as a dependent for 2019, but will not be for 2020, he will  get it in 2021, when he files a 2020 tax return.

Note that the requirement is not just whether he is actually claimed as a dependent, it's whether he qualifies to be claimed as a dependent. 

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