Urgent 1099-Q and 1099-T Question

[Hal_Al · Accepted solution]

Q. Can I  let kid file tax return by herself to get education credit? 

A.  Yes and No.  

 Unless she is over age 23 or her W-2 earnings are more than half her support or she is not a full time student, she is not eligible for the refundable portion  of the American Opportunity Credit.

If she has a tax liability, she can claim a non-refundable credit, if you forgo claiming her as a dependent (and the $500 other dependent credit). In TurboTax, she indicates that she CAN be claimed as a dependent but will not actually be claimed. 

Q. Can medical school application and preparation course etc fee be accounted as expense for education credit?

A. Yes and No.  The application fee can be counted, if it was paid in the same year that the the student was enrolled in classes.  The preparation course fee can not be counted, unless it was taken at the same school or another "eligible institution".  Grad students are not eligible for the American Opportunity Credit, but can claim the less generous Lifetime Learning Credit.

[jinghai2001]

@Hal_Al Thanks a lot.

Your answers to the questions are very helpful! (Q. Can I  let kid file tax return by herself to get education credit?  and Q. Can medical school application and preparation course etc fee be accounted as expense for education credit?)

I would like to confirm my understanding:  the application fees are for 2022 medical school year, not for the same school the kid was attending and So cannot be accounted as education expense for 2021.  How about 2021 online courses? which is related to kid's biology major and MCAT testing preparation and was taken during undergraduate year 2021.

[Hal_Al]

Q.  The application fees are for 2022 medical school year, not for the same school the kid was attending and So cannot be accounted as education expense for 2021?

A.  That's correct

Q.   How about 2021 online courses? which is related to kid's biology major,

A.  Schools that are online only are not eligible. Online courses at schools that also have regular classroom courses ("eligible institutions") are eligible. 

Q. How about MCAT testing preparation that was taken during undergraduate year 2021.

A. Again, yes if taken at an "eligible institution".   The course must also be part of a degree program to be eligible for the American Opportunity  Credit (AOTC), so probably not. The Lifetime Learning Credit (LLC) does not have the degree candidate qualifier, but must still be taken at an eligible institution. .  A student may not claim both the AOTC and LLC, in the same year, even if neither credit is maxed out.

The school should be able to tell you if it is an eligible educational institution. In general, an eligible educational institution is an accredited college, university, vocational school, or other postsecondary educational institution, including accredited, public, nonprofit, and proprietary (privately-owned, profit-making) postsecondary institutions. Additionally, in order to be an eligible educational institution, the school must be eligible to participate in a student aid program administered by the Department of Education. If they issue a 1098-T they are probably an eligible institution.

Enter your school at the link below, to see if it's on the dept. of education list.

https://ope.ed.gov/dapip/#/home