college student-claiming rent

[akagtroyer]

Please help me.  My son attended college, and remained at his house that he rents with 4others the entire year.  He worked part time, while paying his own rent, utilities etc.  The only thing we provided is some money for food and gas.  He gets scholarships for school and only has FAFSA loans of which are not being paid on yet.  We paid the difference of college from the amount of tuition minus the FAFSA loans minus the scholarships.  What determines if he paid for himself more than 50%?  Nothing lays this out.  

[Vanessa A]

Basically, if he provided more than half of his food, lodging, utilities, clothing, medical and dental expenses, then he would have paid more than 50% of his own expenses with the money he earns.  Scholarships do not count as part of the equation.  So if he is using scholarship money for any of his expenses, that does not count.  Sharing a house with 4 others, does not affect the calculations as he is still paying his 1/5 of the rent and utilities.  So whatever his costs are, is what would be considered his rent and such.

You can use this worksheet to determine if he paid over half of his own support or not. 

If he did not provide over half of his support, and he is under 24, if you choose not to claim him as a dependent so he can claim the AOTC, he would only be eligible for the nonrefundable portion of the credit.

"If you were under age 24 at the end of 2023 and the conditions listed below apply to you, you cannot claim any part of the American opportunity credit as a refundable credit on your tax return. Instead, you can claim your allowed credit, figured in Part II, only as a nonrefundable credit to reduce your tax.

You don't qualify for a refundable American opportunity credit if 1 (a, b, or c), 2, and 3 below apply to you.

1. You were:

a. Under age 18 at the end of 2023, or

b. Age 18 at the end of 2023 and your earned income (defined later) was less than one-half of your support (defined later), or

c. Over age 18 and under age 24 at the end of 2023 and a full-time student (defined later) and your earned income (defined later) was less than one-half of your support (defined later).

2.At least one of your parents was alive at the end of 2023.

3.You're not filing a joint return for 2023."  Instructions for form 8863

[akagtroyer]

Thank you for the info.  Is there someone that would help with that form as well?

[akagtroyer]

Is this form to be filled out by the student or parent?  The first question, is that for the student?  If yes it asks the total amount borrowed.  Are the FAFSA portions considered borrowed money?  

[KrisD15]

To clarify, how much of the tuition did you pay?

Do you still maintain a room in your house for the student and is it assumed the student, although at school, is still living in your house? 

Do you cover the student's health insurance? 

[akagtroyer]

He has his old bedroom but he lives and works where he goes to school for the last two years.  He may not return back home due to a job.  When you say how much in tuition did you pay, do you mean percentage after scholarships and FAFSA loans?   Yes i cover the students health insurance

[Vanessa A]

Does he return home on summer breaks and such or does he stay in his apartment year round?  If he is staying year round at his home at the school, and has for the past 2 years without intention of returning home, then his home with his roommates would be his home and his bedroom would not count as his home any longer. 

How old is he?

What was his total tuition? How much are the loans?  How much are the scholarships? Whose name are the loans in?  The loans count as support for the person who is responsible for the loan.  So if he took the loan out, then this would count as him paying for his education.

Grants and Scholarships do not count as support.  Loans do count as support on the side of the person who is liable for the loan.

[akagtroyer]

ok so, i have kind of come to the conclusion that he has not paid over 50% himself so my next issue and only issue left is....when we file for him, since he does not live at home i assume i put his address where he lives and has been living for 3 years while going to school, and then when it asks for a school district i use the one where he is at now, and then i add that he pays rent for 12 months?  By adding rent paid it increases his return by alot so this is where i need to make sure i have done it correctly.  He hasnt changed his drivers license yet but thats because he isnt sure about his current job when he graduates.  That shouldnt matter.  My question is, i am assuming i cant have his address on the federal form be our house and then the rest be where he is currently living.  It would all have to match.  Also as far as it asking his expenses for school, does the payment for books have to come from his bank account or on his credit card.  Im not sure what kind of proof would be required if needed, and i want to do it correctly.  Can he claim the meal plan we had to pay for seperately due to being off campus.   Do we inlcude his FAFSA loans that he hasnt started paying on, or is that portion only for loan interest or loans he has begun paying on?  

[Hal_Al · Accepted solution]

You're looking for a straight forward answer and one may not be available. 

Usually, when a dependent child goes away to college, that is only considered a temporary absence from the parent's home and the student is considered to still be living with the parent, even if the student lives off campus.  In the TT interview, you would answer that he lived with you all year.

In your case, the circumstances are such that he MAY not be considered as living with you.  You have to make that decision. 

There are two types of dependents, "Qualifying Children"(QC) and Other ("Qualifying Relative" [QR] in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test. He can not be your QR because his income is too high (I assume from his part time job). In order to be your QC, he must be considered as living with you. In order for you to get the $500 other dependent credit and qualify for the tuition credit (as much as $2500), you need to say he lived with you.  I think the facts support that decision. He's still a kid away at school, not providing more than half his own support.  You can have his address on the federal form be your address. 

You also appear to be asking about some sort of state rent credit. Which state?  The general rule is that it only applies to your primary residence and would not be applicable to student housing. But that may depend on the state

Book costs can be claimed for the education credit. It does not matter how they were paid for.

Room & board (rent & meal plans) are not qualified expenses for the education credit. 

You do not enter anything about loans, other than loan interest actually paid.