Education Credits - Student Graduated, is Working, and Will Not be My Dependent in 2020.

[FOCUSGuy]

I have claimed the 'American Opportunity Credit' and 'Education Credit' for the last four tax years: 2016, 2017, 2018, and 2019.

These credits were for my son/dependent.

He graduated in June of 2020, started working shortly thereafter, and has his own apartment.  I will not claim him as a dependent in 2020.    

I paid $11,503 for his tuition in 2020 (last semester of his senior year).

I know I cannot claim an 'Education Credit' for the tuition payment because my son is not my dependent.

My question is: Can my son claim an 'Education Credit'?  (Perhaps, under the concept that this is a gift to my son, which was then used to pay for tuition?)

[Hal_Al · Accepted solution]

Yes, your son can claim an education credit (or deduction) based on the qualified expenses, you paid.  Although the general rule, in taxes, is that you must pay it to claim it, education is an exception.  All that is necessary is that he was the student (and not somebody's dependent). He did not have to make the payment.

However, he can not claim the more generous American Opportunity Credit (AOC). There is a 4 time limit and all 4 times were used on your returns.  He may claim the Lifetime Learning Credit (LLC) or Tuition and Fees Deduction (TFD).  TurboTax (TT) will determine which is better (almost always the LLC).  The LLC is a maximum of $2000 ($11,503 makes him eligible for the max).  But, no part is refundable. It can only reduce his actual tax liability. 

[FOCUSGuy]

Thank you so much for your reply and thoughts Hal_Al.