do the same rules apply if it is a graduate program?
No. That's why the program asks you if the dependent as completed 4 years of college as of Jan 1 of the tax year. If you answer the question yes, then different rules apply and the program knows what those rules are.
I am unclear if it is an option who claims the excess amount.
In a situation where scholarships and grants exceed the qualified education expenses, then it's the student who will report all of the education stuff on the student's return, and the student will pay taxes on excess that was not used for qualified education expenses. it does not change the fact that parents will still claim the student as their dependent, if they qualify to claim the student as their dependent. It does not change the fact that the student must select the option for "I can be claimed on someone else's tax return" if the parents qualify to claim the student - even if the parents do not claim the student.
Please feel free to redirect me to the IRS if I am making this far too complicated.
No, you're not making things complicated at all. The IRS does that very well all on their own. Just go back and read my very first response in this thread. I clearly reference IRS Publication 970 and then I do my best to put that document into plain english, so that all of us mere mortals can comprehend it. 🙂
You want complicated? Just read IRS Publication 970. Then take two cyanide tablets and call me in the morning. 🙂
