in Education
2801424
2019 Separation Agreement says ex-wife and I will split college son's expenses alternating school years. Also says 'As long as he is a student, she can claim him on her taxes'. She paid all his expenses in 2021. However, I paid all expenses in 2022 and now she may not be able to claim him. She's willing to waive that sentence and let me claim him. What needs to be done and can I now claim Head of Household? He lived entire year at school.
You'll need to sign in or create an account to connect with an expert.
OK ... as the custodial parent she gets to claim all of the child releated credits UNLESS she waives the right to you by giving you a signed form 8332 HOWEVER this will only allow you to claim the dependency exemption AND the education credit. She retains the right to use the dependent for the HOH filing status and the EIC.
OK ... as the custodial parent she gets to claim all of the child releated credits UNLESS she waives the right to you by giving you a signed form 8332 HOWEVER this will only allow you to claim the dependency exemption AND the education credit. She retains the right to use the dependent for the HOH filing status and the EIC.
Wow. Thanks for the quick reply. Not worried about EIC, she'll like HOH. He has no earned income but maybe $10k in unearned income so we'll discuss over the holidays.
Here's a bit more detailed guidance, in case you find it helpful for the education stuff. I recommend folks read through it three times.
The first read, you just read everything.
The second read, put a line through all that does not apply to the given situation.
The thrid read, only read and apply that which has not been lined through.
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.
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 any 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 investment income exceeds $1,050 or if the student’s earned income when added to the excess scholarships/grants does NOT exceed $12,350 for the 2019 tax year, 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 $12,350, 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 to and included in the total on line 7 of the 1040.
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 included on line 8z of the SCH 1 which gets transferred to line 8 of the 1040.
Finally, out of pocket money is applied to qualified education expenses
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 since the student is the one who received those funds.
the earned income credit goes to the custodial parent based on their earned income, if they meet the qualifications. but you did bring up something in that he may have to file his own tax return and note on it they he can be claimed as a dependent.
filing is required if his unearned income is over $1100 for 2022
in addition there may be the "kiddie tax" if unearned income is over $2300
the kiddie tax applies when (certain rules have not been provided because they only apply if your son had earned income.)
1. The child had more than $2,300 of unearned income.
2. The child is required to file a tax return.
3. The child either:
a) Was under age 18 at the end of 2022 or,
b) Was a full-time student at least age 19 and under age 24 at the end of 2022.
4. At least one of the child's parents was alive at the end of 2022.
5. The child doesn’t file a joint return for 2022.
form 8615 is used and included with the son's return if subject to the tax
or since all the son's income is all unearned (assuming no withholding) she can include his income on her return (he doesn't file) by filing form 8814. the 8814 usually results in a higher tax because the first $1100 is taxed at 10% while on the 8615 it's taxed at zero.
.
Still have questions?
Questions are answered within a few hours on average.
Post a Question*Must create login to post
Ask questions and learn more about your taxes and finances.
anonymouse1
Level 5
in Education
rgrahovec55
New Member
bgoodreau01
Returning Member
bgoodreau01
Returning Member
tenacjed
Returning Member
in Education