Education Tax Credit

[rolltidedad76]

My son is 19 years old and was only a part time student, as he only took 11 hours max both semesters.  I do not think I can claim as a dependent.  However, he had a part time job and earned some income.  Can he claim the tuition reported to him on Form 1098-T to claim the Education Tax Credit even though technically I paid it.

[Hal_Al]

Q. Can he claim the tuition reported to him on Form 1098-T to claim the Education Tax Credit even though technically I paid it?

A. Yes. Although the general rule, in taxes, is that you must be the one making the payment, to get the deduction or credit, there is an exception for education.

Q.  I do not think I can claim as a dependent.  However, he had a part time job and earned some income?

A. If his income was over $5050, you cannot claim him.  However, if he takes 12 credit hours (full time) for one semester (not quarter, it has to cover parts of 5 months), the dependent rules change. 

See full dependent rules at: https://turbotax.intuit.com/tax-tools/tax-tips/Family/Rules-for-Claiming-a-Dependent-on-Your-Tax-Ret...

https://www.irs.gov/help/ita/whom-may-i-claim-as-a-dependent

[rolltidedad76]

Thanks.  All I had read was that I could not claim Sam as a dependent because he was 19 at year end and not a full-time student for either semester.  However, when I did the IRS questionnaire, if his AGI is under $5050, it says I can claim him as a dependent provided that he lived with me and I provided more than 1/2 his support, which I did.  Is that accurate?

[MindyB]

Yes. Note also that he will not qualify for the child tax credit, but he may qualify for the $500 credit for other dependents.

Here is some more detailed information: Rules for Claiming Dependents on Taxes

[Hal_Al]

Since he is now your dependent, you claim the tuition credit, on your tax return.  He does not claim it.  

This is a good thing. The family gets $2500 they wouldn't have gotten the other way. 

[rolltidedad76]

Sorry for the yo-yo.  I just got his W2 and he did earn over $5050 in 2024.  He earned $9400k.  However, he told me that he did enroll for 12 hours one semester but dropped a class that he was failing late.  For the Education Tax Credit, I am divorced and file as HOH so my MAGI is over the $90k limit to get either of the 2 education tax credits.  It was decreed at the divorce that he would be my dependent to claim on the return as my ex-wife and I have 50-50 true joint custody.  Back to my original question.  Can I elect not to claim him as a dependent (since I'm not sure on how the full-time student works when you enroll for 12 hours one semester but then drop a class late) and file taxes for him (and mark the box that he can't be claimed as anyone's dependent) and claim the AOTC on his tax return since it is partially refundable?  He has decided to enlist in the military in 2025 so this is really the only year he will be eligible for the AOTC based on what I read.

[Hal_Al]

Q.  Can I elect not to claim him as a dependent.

A. No.  Only if he does not qualify as your dependent, can he claim the refundable credit.  He will only get the $1000 refundable portion  You need to do the calculation on how long he was a Full time student. Dropping out, even late usually means he was a student for less than 5 months.  So, if it was spring semester and he was still in school any part of May, he meets the 5 month rule. For the fall, any part of Aug & Dec. means he meets the rule.   

If he doesn't meet the rule, then he can't be a dependent and he can so state that on his return and claim the credit.  If he meets the five month rule, then, you can elect to not claim him, but it won't work.  He doesn't have enough income. 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 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. 

Q.  He has decided to enlist in the military in 2025 so this is really the only year he will be eligible for the AOTC based on what I read?

A. There is no age cut off, he'll eligible while in and after military service.  Yo may not  want to use up one of the four allowable claims on $1000 now if it'll be worth $2500 four times in the future

[rolltidedad76]

So, just to be clear, let me add some info and restate what I think I read:

I spoke with him and he did not meet the full-time student requirement.  He dropped the class in November which meant he only was full time for 4 months.  He can't be claimed as my dependent since he is over 19, was not a full-time student and earned over $5050.  He can file a return, claim the refundable portion of the credit ($1k).  I paid roughly $3800k in tuition for 2 part time semesters at a local Junior College.  As for saving the $2500 credit for later, I will never meet the MAGI restrictions and will never be able to claim the credit.  Wouldn't it be my/his interest to file his taxes and claim the credit I can on his return?

[Hal_Al]

Q. I paid roughly $3800k in tuition for 2 part time semesters at a local Junior College. 

A.  $3800 works out to $980 refundable AOTC.  It takes $4000 to get the full $1000. Books and a computer also count.

Q. As for saving the $2500 credit for later, I will never meet the MAGI restrictions and will never be able to claim the credit.  Wouldn't it be my/his interest to file his taxes and claim the credit I can on his return?

A. I was thinking HE would be able to claim the AOTC, in the future, not you.  But yes, it's a decision he/you will have to make; a sure $980  now vs a possible $2500 in the future. Another factor: the AOTC is not eligible for grad school, just undergrad and vocational school. Also, you can't count tuition paid by GI benefits for the AOTC. 

[Hal_Al]

Another thing to consider, in the future, you can't count tuition the AOTC, if it was covered by military or veteran's assistance.  Taking the $980 now looks like the smart move.

[rolltidedad76]

Thanks.  That is what I was thinking is that the Air Force may help pay for future tuition and it's not a guarantee that my son will ever go back to college.  I think I will file his taxes and claim the credit while I can.  If he does go back, it's just $1500 at risk.