topic Can me and my wife claim the American Opportunity Credit for each of us? in Deductions & credits

Can me and my wife claim the American Opportunity Credit for each of us?

Trey1 — Thu, 06 Jun 2019 13:34:50 GMT

My parents paid for my college, but my wife paid for hers. We both attended full time last year for 1 semester. This was also our 4th year so it has only been claimed 3 times. Could both of us get the AOTC if we are married filing jointly? Also, we did not get married till the end of the year, and both lived separately with our parents for more than 6 months out of the year (so they supported us for over half the year). But we were going to file jointly therefore our parents could not claim us as dependents.

Before ANY of you file you will need to figure out if you...

Critter — Thu, 06 Jun 2019 13:34:52 GMT

Before ANY of you file you will need to figure out if you are a qualifying dependent of your parents which it sounds like you do ... you also need to know how much you & the wife earned. If they can claim you as a dependent then they get the education credit also.

Yes we are both qualifying dependents. We did not start p...

Trey1 — Thu, 06 Jun 2019 13:34:54 GMT

Yes we are both qualifying dependents. We did not start paying for living bills until this August (past the 6 month mark). We didn't start our jobs till July and earned a total of around 45-50k combined for 2017. However, if we are able to be claimed as dependents do we HAVE to be, or is the choice ours?

@Critter#2

Trey1 — Thu, 06 Jun 2019 13:34:56 GMT

@Critter#2

If you qualify to be claimed as dependents your parents c...

Critter — Thu, 06 Jun 2019 13:34:57 GMT

If you qualify to be claimed as dependents your parents can choose to not claim you on their return but you also cannot be claimed on your own return. It is a convoluted system of the tax code.

There are two types of dependents--qualifying child and qualifying relative. There is no specific income limit for a qualifying child dependent for you to claim them. Here are the requirements:

1. The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.

2. The child must be (a) under age 19 at the end of the year, (b) under age 24 at the end of the year and a full-time student, or (c) any age and permanently and totally disabled.

3. The child must have lived with you for more than half of the year. Temporary absences while away at college are considered living with you.

4. The child must not have provided more than half of his or her own support for the year.

5. If the child meets the rules to be a qualifying child of more than one person, you must be the person entitled to claim the child as a qualifying child.

6. The child must be a U.S. citizen or U.S., Canada or Mexico resident for some portion of the year.

7. The child must be younger than you (or your spouse, if filing jointly) unless disabled.

If the person doesn't meet the qualifying child requirements, then there is an income limit to be claimed as a qualifying relative:

1. The person cannot be your qualifying child or the qualifying child of any other taxpayer. A child is not the qualifying child of any other taxpayer if the child's parent (or any other person for whom the child is defined as a qualifying child) is not required to file an income tax return or files an income tax return only to get a refund on income tax withheld.

2. The person either (a) must be related to you or (b) must live with you all year as a member of your household. (and must not be in violation of local law)

3. The person's gross taxable income for the year must be less than $4,050 in 2016.

4. You must provide more than half of the person's total support for the year.

5. The person must be a U.S. citizen, U.S. resident alien, U.S. national, or a resident of Canada or Mexico.

If a person meets the requirement to be claimed as a dependent by someone else, they must indicate that on their tax return if they are required to file one.

so-highlig??????

Can I claim a newborn baby?

So if I cannot be claimed on my own tax return, then I ca...

Trey1 — Thu, 06 Jun 2019 13:34:59 GMT

So if I cannot be claimed on my own tax return, then I cannot claim the education benefits, right?

BUT, if we file as 'Married Jointly', then our parents ar...

Trey1 — Thu, 06 Jun 2019 13:35:00 GMT

BUT, if we file as 'Married Jointly', then our parents are not allowed to claim us as a dependent. Does this fix the issue, if we file jointly? Because now I am worried because my work does an HSA plan for health insurance, and you are apparently not allowed to be able to be claimed as a dependent on someone else's tax returns. @Critter#2

Now this is where it gets tricky ... if you are qualified...

Critter — Thu, 06 Jun 2019 13:35:02 GMT

Now this is where it gets tricky ... if you are qualified dependents then you could file a joint return(but not claim your own exemptions) to get back a refund of withheld taxes only not the credits. That is the one exception to the rules. PLEASE sit down together to discuss your situation ... or seek professional assistance this tax year to see the best option for all parties since there are so many moving parts.

@Critter#2 I really appreciate you taking the time to res...

Trey1 — Thu, 06 Jun 2019 13:35:03 GMT

@Critter#2 I really appreciate you taking the time to respond. We are all on the same page of discussing the situation. We just don't know much about the tax rules, so I figured I'd ask some questions on here. But it sounds like we really need to seek professional assistance this year. Once again, I really appreciate your help!

You can indeed file jointly and claim themselves and ed c...

Anita01 — Thu, 06 Jun 2019 13:35:06 GMT

You can indeed file jointly and claim themselves and ed credits. A child who chooses to file jointly with their spouse for any reason other than simply a refund of tax withheld CANNOT be a qualifying child dependent of their parents. It's always the married child's choice. You are free to file jointly, claim yourselves because you are not a qualifying child dpendent of your parents, and claim your education credits.

@TurboTaxAnita So even though we qualify as dependents si...

Trey1 — Thu, 06 Jun 2019 13:35:08 GMT

@TurboTaxAnita So even though we qualify as dependents since we were supported by them for 6 months, we are still able to claim our education credits? And since we both went to school full time, that means we could both claim the AOTC (so 2500 x 2)? I know we can file as jointly since we are married but the above answer was suggesting we couldn’t claim those education credits even if our parents declined to add us as dependents.

If you ARE qualifying dependents then you don't have a ch...

Critter — Thu, 06 Jun 2019 13:35:08 GMT

If you ARE qualifying dependents then you don't have a choice. Anita's answer is ONLY good if you are NOT qualifying dependents. Seek help on this subject matter please.

You do not qualify as their dependent children because on...

Anita01 — Thu, 06 Jun 2019 13:35:10 GMT

You do not qualify as their dependent children because one of the qualifying requirements is  that, if the child is married and files a joint return with their spouse for any reason other than getting a refund of tax withheld, then that child does not qualify as a dependent.  Since you would claim education credits, you are filing for a reason other than a refund of tax withheld, so you are not a qualifying child for them.
Your parents cannot decline to claim you under these circumstance. .  It is YOUR choice whether you want to file jointly and claim yourselves and your education credits because you are then not qualifying children for them.

One of the questions to qualify you as their qualifying child dependents asks if you were married, then if you are filing a joint return only to receive a refund.  If you are filing for the refund of tax paid, plus any other reasons, yo cannot be their qualifying child dependent.  Since you don't qualify for them, you claim your own exemptions by filing jointly and NOT checking the box that says you can be claimed by someone else.

See the following from page 15 of IRS Publication 501:
"Joint Return Test (To Be a
Qualifying Child)
To meet this test, the child can't file a joint return
for the year.
Exception. An exception to the joint return test
applies if your child and his or her spouse file a
joint return only to claim a refund of income tax
withheld or estimated tax paid.
Example 1—child files joint return. You
supported your 18-year-old daughter, and she
lived with you all year while her husband was in
the Armed Forces. He earned $25,000 for the
year. The couple files a joint return. Because
your daughter and her husband file a joint return,
she isn't your qualifying child.
Example 2—child files joint return only
as claim for refund of withheld tax. Your
18-year-old son and his 17-year-old wife had
$800 of wages from part-time jobs and no other
income. They lived with you all year. Neither is
required to file a tax return. They don't have a
child. Taxes were taken out of their pay so they
file a joint return only to get a refund of the withheld
taxes. The exception to the joint return test
applies, so your son may be your qualifying
child if all the other tests are met.
Example 3—child files joint return to
claim American opportunity credit. The
facts are the same as in Example 2 except no
taxes were taken out of your son's pay or his
wife's pay. However, they file a joint return to
claim an American opportunity credit of $124
and get a refund of that amount. Because
claiming the American opportunity credit is their
reason for filing the return, they aren't filing it
only to get a refund of income tax withheld or
estimated tax paid. The exception to the joint
return test doesn't apply, so your son isn't your
qualifying child.
<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/p501.pdf">https://www.irs.gov/pub/irs-pdf/p501.pdf</a>

Note in the publication under Qualifying Relative tests, the examples include one showing that this test holds true.  If you file a return for anything other than just a refund of tax, you do not qualify your parents for the Qualifying relative dependency either.
Example 2—return filed to claim refund.
The facts are the same as in Example 1 except
your friend had wages of $1,500 during the year
and had income tax withheld from her wages.
She files a return only to get a refund of the income
tax withheld and doesn't claim the earned
income credit or any other tax credits or deductions.
Both your friend and her child are your
qualifying relatives if the support test is met.

So @Critter#2 you are disagreeing with @TurboTaxAnita? I’...

Trey1 — Thu, 06 Jun 2019 13:35:11 GMT

So @Critter#2 you are disagreeing with @TurboTaxAnita? I’ve been through the irs help question thing (the questionnaire they provide) and it says I do qualify to claim them. One of the specific questions is if I’m filing jointly. If I file jointly, it says I can do the credit, but If i file separately, it says I can’t. I really am going to seek professional help, but I’d like to go in there having some preexisting knowledge especially if you guys disagree because I don’t want to be told wrong by the accountant I end up going to.

So @Critter#2 you are disagreeing with @TurboTaxAnita? I’...

Trey1 — Thu, 06 Jun 2019 13:35:12 GMT

Not disagreeing but there are 2 sides to the coin ...FIRS...

Critter — Thu, 06 Jun 2019 13:35:13 GMT

Not disagreeing but there are 2 sides to the coin ...FIRST you must determine if you are dependents. Once that is determined THEN you can decide the path you need to take.

Seek help or read the pub 501 but the first question to...

Critter — Thu, 06 Jun 2019 13:35:15 GMT

Seek help or read the pub 501 but the first question to answer is "are you a dependent?"

please read my entire response again, I added new references

Anita01 — Thu, 06 Jun 2019 13:35:16 GMT

please read my entire response again, I added new references

@Critter#2 okay according to IRS questionnaire, if we fil...

Trey1 — Thu, 06 Jun 2019 13:35:18 GMT

@Critter#2 okay according to IRS questionnaire, if we filed jointly and were not filing just to claim a refund of taxes withheld, then we are not dependents therefore cannot be claimed (which is what @TurboTaxAnita has very graciously cited more sources and examples confirming this) So that should answer my dependent filing question (unless you disagree). I’m still wondering though, are we both able to claim the credit? Meaning I get the $2500 credit and so does my wife (equaling 5000) since we are filing jointly and not dependents. Or are we treated as 1 therefore can only get one credit?

Yes, you can each receive an education credit.

Anita01 — Thu, 06 Jun 2019 13:35:19 GMT

Yes, you can each receive an education credit.