My son made $4500 and is in his 2nd year of college, (and is not a dependent on our taxes) why can't he take the educational credits?

moshmomma — Wed, 05 Jun 2019 03:56:18 GMT

How old is your son and why is he not your dependent?

DanielV01 — Wed, 05 Jun 2019 03:56:20 GMT

How old is your son and why is he not your dependent?

He’s only 19 but TurboTax says because he made more than...

moshmomma — Wed, 05 Jun 2019 03:56:21 GMT

He’s only 19 but TurboTax says because he made more than 4200 we can’t claim him. (He made 4500)

You misunderstood. See below.

SweetieJean — Wed, 05 Jun 2019 03:56:22 GMT

You misunderstood. See below.

He probably had no tax liability to would not get a credi...

Bsch4477 — Wed, 05 Jun 2019 03:56:24 GMT

He probably had no tax liability to would not get a credit since his tax cannot go below zero. He would not be eligible for the refundable part of the education credit.

If he is a full time student, he can be your dependent.

Bsch4477 — Wed, 05 Jun 2019 03:56:25 GMT

If he is a full time student, he can be your dependent.

So no matter his income I can claim him? TurboTax online...

moshmomma — Wed, 05 Jun 2019 03:56:27 GMT

So no matter his income I can claim him? TurboTax online program said no! So I didn’t claim him. Was hoping to claim his education but TurboTax is not letting me do that either.

You can claim him, yes, because he is a student under 24....

DanielV01 — Wed, 05 Jun 2019 03:56:28 GMT

You can claim him, yes, because he is a student under 24. The test for support for a Qualifying Child does not depend on his income, but rather on whether or not he provided at least half of his own support. I really doubt that he did on $4500 of income, as his schooling alone was paid for by someone else. And since he is still considered to live with you, he is your qualifying child. This link may help you to understand this: <a rel="nofollow" target="_blank" href="https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/qualifying-child-rules">https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/qualifying-child-rules</a>

The program said no, because you told the program he live...

Carl — Wed, 05 Jun 2019 03:56:29 GMT

The program said no, because you told the program he lived with you less than 12 months. Go back to that screen, read the small print so you will understand why I'm telling you to select "the whole year", then select "the whole year" and press on.

Ugh! Ok. Wish I asked question before I filed his taxes....

moshmomma — Wed, 05 Jun 2019 03:56:30 GMT

Ugh! Ok. Wish I asked question before I filed his taxes. Thank you everyone for the more in-depth information. I’ll make sure to claim him until he graduates!!!

You may still claim him, but you will need to mail in you...

DanielV01 — Wed, 05 Jun 2019 03:56:32 GMT

You may still claim him, but you will need to mail in your return, and he should amend his to make the claim process faster. His return should not be affected in the least, but yours will improve significantly. He needs to check the box that someone will claim him as a dependent on his return, and file the amended return accordingly.

There's a reason your student does not get any education...

Carl — Wed, 05 Jun 2019 03:56:34 GMT

There's a reason your student does not get any education credits. I'll explain, and then follow my explaination with the entire gist in plain English, from IRS Publication 970. Take note of the following:

- Your student's earnings do not matter. They could a million dollars and still qualify as your dependent.
- There is absolutely no requirement for the parents to provide the student any support. Not. one. single. penny. The support requirement is on the student, and only the student. That requirement is: "If the student provided "LESS" than 50% of their own support, then the parents qualify to claim the student as a dependent on the parent's tax return. Third party income such as scholarships, grants, 529 funds, money from mom & dad, gifts from Aunt Mary, etc do not count for the student providing their own support."

Now, having earned only $4,500 in 2018, there is no way possible your student provided more than half of their own support. Therefore you qualify to claim that student as your dependent. If the student files a tax return then the student is *required* to select the option for "I can be claimed on someone else's return". It does not matter if you actually claim your student as a dependent, or not. If you just *QUALIFY* to claim the student, that's all it takes. You the parents have a choice to claim the student or not. The student does *not* have a choice. If you just "qualify" to claim the student, then the student must select the option for "I can be claimed on someone else's return."

Having earned only $4,500 in 2018, your student automatically qualifies for the standard deduction of the "lesser" of what they earned, or $12,000. So with his $4,500 of earned income tax exempt automatically, there's no taxable income left for anything to be deducted from. Hence, they get no education credits.

Now here's that gist from IRS Publication 970.

College Education Expenses

Colleges work in academic years, while the IRS works in calendar years. So the reality is, it takes you 5 calendar years to get that 4 year degree. With that said:

- Scholarships and grants are claimed/reported as taxable income (initially) in the year they are received. It does not matter what year that scholarship or grant is *for*

- Tuition and other qualified education expenses are reported/claimed in the tax year they are paid. It does not matter what year they pay *for*.

Understand that figuring out who claims the student as a dependent, and determining who claims the education expenses & credits, is two different determinations. It depends on the specific situation as outlined below. After you read it, I have also attached a chart at the bottom. You can click on the chart to enlarge it so you can read it. If it’s still to hard to read on your screen then right-click on the enlarged image and elect to save it to your computer. Then you can double-click the saved image file on your computer to open it, and it will be even easier to read.

Here’s the general rules gisted from IRS Publication 970 at http://www.irs.gov/pub/irs-pdf/p970.pdf Some words are in bold, italicized, or capitalized just for emphasis. This is because correct interpretation by the reader is everything. Take the below contents LITERALLY, and do not try to “read between the lines”. If you do, you’ll interpret it incorrectly and risk reporting things wrong on your taxes. For example, there is a vast difference between “can be claimed” and “must be claimed”. The first one indicates a choice. The second one provides no choice.

Now there are two separate determinations to be made here.

Who claims the student as a dependent.
Who reports all the education expenses and claims all the education credits.

First, who claims the student as a dependent?

If the student:

Is under the age of 24 on Dec 31 of the tax year and:

Is enrolled in an undergraduate program at an accredited institution and:

Is enrolled as a full time student for one academic semester that begins during the tax year, (each institution has their own definition of a full time student) and:

the STUDENT did NOT provide more that 50% of the STUDENT’S support (schollarships/grants received by the student ***do not count*** as the student providing their own support)

Then:

The parents qualify to claim the student as a dependent on the parent's tax return . Period, End of Story. But one thing I want to point out here. The parents *QUALIFY* to claim the student. The parents are *NOT* required to claim the student as a dependent. But even if they don’t, since they *qualify* to claim the student, then if the student will be filing their own tax return the student is *REQUIRED* to select the option for “I can be claimed on someone else’s return”. To reiterate:

If the student qualifies to be claimed on the parent’s tax return, then the student can not take the self-exemption on their own tax return, no …matter…what.

Who reports all the education expenses and claims all the credits?

If (and only if) the parents qualify to claim the student as a dependent, *and* the parents actually are claiming the student as a dependent, then:

The parents will claim all schollarships, grants, tuition payments, and the student's 1098-T on the parent's tax return and:

The parents will claim all educational tax credits that qualify.

If the student will be filing a tax return and:

The parents qualify to claim the student as a dependent, then:

The student must select the option for "I can be claimed on someone else's return", on the student's tax return. The student must select this option even f the parent's qualify to claim the student as a dependent, and the parents do not claim them.

Here’s when the parents will claim the student as a dependent, but the parents will NOT claim any of the education expenses or report the 1098-T on the parent’s tax return.

.If the amount of scholarships/grants/529 funds exceeds the amount of qualified education expenses, then the student will report the education stuff on the student’s tax return. The parent will know this when reporting the education on their tax return, because the parent will not qualify for any of the tax credits. (They only qualify for tax credits based on out-of-pocket qualified expenses not covered by scholarships/grants.) Also, the parent’s will not qualify for the credits depending on their MAGI which is different for each credit, and depends on the marital status of the parent or parents.

In the case where scholarships/grants covers “all” qualified education expenses, the parent’s don’t need to report educational information on their dependent student at all – but they still claim the student as a dependent if they “qualify” to claim the student.

If the scholarships/grants exceed the qualified education expenses, then the student will report the 1098-T and all other educational expenses and scholarships/grants on the student’s tax return. The student will pay taxes on the amount of scholarships/grants that are not used for qualified education expenses. However, if the student’s earned income reported on a W-2, when added to the excess scholarships/grants does NOT exceed $6350, then the student doesn’t even need to file a tax return, and nothing has to be reported.

If the student has any other taxable income not reported on a W-2, and it exceeds $400, (not including taxable portion of scholarships/grants) then most likely it’s considered self-employment income. That will require a tax return to be filed and the student will have to pay the Self-Employment tax on that income.

Finally, regardless of the student’s W-2 earnings, if any taxes were withheld on those earnings and it was less than $6350, then the student should file a tax return so as to get those withheld taxes refunded.

1099-Q Funds

First, scholarships & grants are applied to qualified education expenses. The only qualified expenses for scholarships and grants are tuition, books, and lab fees. that's it. If there is any excess, then it's taxable income. It automatically gets transferred as follows depending on what type of 1040 you’re riling.

1040-EZ excess scholarship income is included on line 1.
1040-A excess scholarship is included on line 7.
1040 Excess scholarhip is included on line 7.

Next, 529/Coverdell funds reported on 1099-Q are applied to qualified education expenses. The qualified expenses for 1099-Q funds are tuition, books, lab fees, AND room & board. That's it. If there are any excess 1099-Q funds they are taxable. The amount is transferred as indicated above with one exception. For the 1040 excess ESA/QTP funds get transferred to line 21 with the annotation “SCH” next to it.

Finally, out of pocket money is applied to qualified education expenses. The only qualified expenses for out of pocket money is tuition, books, and lab fees. Room & board is NOT a qualified expense for out of pocket money.

When you have a 1099-Q it is extremely important that you work through the education section of the program in the order it is designed and intended to be used. If you do not, then there is a high probability that you will not be asked for room & board expenses, and you could therefore be TAXED on your 1099-Q funds.

Finally, if "all" qualified expenses are covered by scholarships, grants, 1099-Q funds and there is ANY of those funds left over, the left over excess is taxable. While the parent can still claim the student as a dependent, it is the student who will report all the education stuff on the student's tax return. That's because the STUDENT pays the taxes on any excess scholarships, grants and 1099-Q funds.

He is your dependent and you should claim the education c...

DanielV01 — Wed, 05 Jun 2019 03:56:37 GMT

He is your dependent and you should claim the education credits on your tax return. Since he was under 24, and still a student, he is your dependent. Even if he is away at college, he is still considered to be living with you (IRS considers this a temporary absence). Therefore, you will claim him. He will file a tax return to get any taxes withheld from his income as a dependent, and you will claim any Educational Credits in his behalf. This FAQ explains a bit further: https://ttlc.intuit.com/replies/3301513

topic The program said no, because you told the program he live... in Education

My son made $4500 and is in his 2nd year of college, (and is not a dependent on our taxes) why can't he take the educational credits?

How old is your son and why is he not your dependent?

He’s only 19 but TurboTax says because he made more than...

You misunderstood. See below.

He probably had no tax liability to would not get a credi...

If he is a full time student, he can be your dependent.

So no matter his income I can claim him? TurboTax online...

You can claim him, yes, because he is a student under 24....

The program said no, because you told the program he live...

Ugh! Ok. Wish I asked question before I filed his taxes....

You may still claim him, but you will need to mail in you...

There's a reason your student does not get any education...

He is your dependent and you should claim the education c...