LLC education credits and dependency

Forum|Forum|3 months ago
April 7, 2026
2 replies
117 views

My daughter (18 year old full time college student) has earned income in 2025 where she needs to file her own taxes. She checked the box "someone else can claim me on their tax return" in Turbotax and selected "someone else will not claim me in 2025". I am not claiming her as a dependent on my tax return even thought I fully support her financially the entire year and can claim her. This is because I don't get any tax advantages of doing that. She has a 1098-T from her school in her name, she entered the numbers and TurboTax determined she can get LCC credits. How come?? I thought IRS disqualifies anyone to claim any education credits (AOTC or LLC) if someone else can claim them as a dependent (even when it's not actually claimed). I'm really confused!!

MinhT1

Level 15

TurboTax is correct.

A taxpayer who can be claimed as a dependent by another taxpayer but is not actually claimed is eligible for the LLC (which is nonrefundable) if she has a tax liability and satisfies all the other requirements. She is also eligible for the nonrefundable portion of the AOTC, but not the refundable portion.

See this IRS document for more information.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

Hal_Al

Level 15

There is a provision that allows your student-dependent to claim a federal tuition credit. From a practical matter it seldom works out, for most families because 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.

But, 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. This is worth up to $2500 (AOTC shifts to all non refundable)

CassianLAuthor

Level 2

Where can I find more information about this "provision"? Can I find this logic in some Turbotax worksheets? Will the fact that she checks the box "someone else can claim me as a dependent" (1040 line 12a) and claiming LLC credit trigger an IRS audit?