college expenses for daughter/stepdaughter

[BrianJory]

My dependent stepdaughter is currently 19 years old and attends a private college full-time which I pay for.

1) my stepdaughter is a US permanent resident but not a US citizen

2) how do I deduct my expenses (what form?)

3) are fees for her dormitory and food plan allowed expenses? (they are around $2,000 per month)

[Faith C · Accepted solution]

Hi BrianJory,

Thank you for asking. Yes, your stepdaughter may qualify for the American Opportunity Tax Credit since she is a US primary resident and here is detailed qualifications for the credit: 

• You paid an eligible student's qualified education expenses for higher education at any college, university, or vocational school with a student aid program administered by the US Department of Education
• The eligible student is you, your spouse, or a dependent on your return
• For the full credit, your MAGI (modified adjusted gross income) is less than $90,000 ($180,000 if you're filing jointly)
  • For a reduced credit, your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you're filing jointly)

An eligible student is defined as a student who:

• Is enrolled at least half-time in a program leading to a degree, certificate, or other recognized credential
• Had at least one academic period beginning during the year
• Didn't claim the American Opportunity Tax Credit for more than three previous years
• Didn't complete the first four years of post-secondary education before the beginning of the year

The American Opportunity Tax Credit cannot be claimed on Married Filing Separately returns nor under any of these conditions:

• The student is a dependent on someone else's return
• The student is a nonresident alien (unless the student's spouse is a resident and they file a joint return treating both as residents, or the parents claim the student as a dependent on their joint return)
• The student had a felony drug conviction

Usually, room and board deductible is not deductible unless it was paid with Coverdell ESA or 529 and here are the expenses qualify for American Opportunity Tax Credit. Here is more details from IRS regarding Form 8863. 

I hope the above information helps and answer your questions. Please feel free to contact us if you have further questions. We are always here to help and support.  We wish you have a wonderful day and thank you for choosing TurboTax!

[SoCalGal22]

Great Question @BrianJory!

Yes , if your  dependent  qualify as  your qualifying child, they are eligible for the American Opportunity Credit (AOTC)  as a US permanent resident.

 An eligible student for the AOTC is a student who:

• Was enrolled at least half time in a program leading toward a degree, certificate or other recognized educational credential for at least one academic period during the tax year,
• Has not completed the first four years of post-secondary (education after high school) at the beginning of the tax year,
• Has not claimed (or someone else has not claimed) the AOTC for the student for more than four years, and
• Was not convicted of a federal or state felony drug offense at the end of the tax year.

From <https://www.irs.gov/credits-deductions/individuals/education-credits-questions-and-answers>

Ideally, you will get their 1098T and report it on your return along with any other expenses.  There are programs that qualify even without one but the IRS often asks questions later on about them.

Here are the expenses that generally qualify. In general, qualified tuition and related expenses for the education tax credits include tuition and required fees for the enrollment or attendance at eligible post-secondary educational institutions (including colleges, universities and trade schools). The expenses paid during the tax year must be for an academic period that begins in the same tax year or an academic period that begins in the first three months of the following tax year.

The following expenses do not qualify for the AOTC or the LLC:

• Room and board
• Transportation
• Insurance
• Medical expenses
• Student fees, unless required as a condition of enrollment or attendance
• Same expenses paid with tax-free educational assistance
• Same expenses used for any other tax deduction, credit or educational benefit

From <https://www.irs.gov/credits-deductions/individuals/education-credits-questions-and-answers>

Do these help in any way?  Please let me know if you are looking for more detail on any one of these.

[SoCalGal22]

@BrianJory 

Please let me know if you are looking for more detail on any one of these.

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[BrianJory]

Thank you for your assistance!

[SuziM]

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