Deducting Education Expenses for an Adult Child:

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Deducting Education Expenses for an Adult Child:

Postby Nowizard » Wed Feb 04, 2009 11:42 am

An adult child who is not a dependent has returned to graduate school. My wife and I are paying for his tuition and have made payments directly to his MBA program. It was an informal understanding from talking to friends that we would be able to deduct $4,000 of these expenses since the tuition was paid directly. IRS Pub. # 970 refers to a variety of deductible education expenses, but it appears that the child must be a dependent to qualify. Is this accurate, and would a claimed deduction be disallowed? It would not make a difference in our choice to pay the tuition, but it would be nice to be able to claim the deduction.

Tim
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Re: Deducting Education Expenses for an Adult Child:

Postby Ron » Wed Feb 04, 2009 12:01 pm

Nowizard wrote:My wife and I are paying for his tuition and have made payments directly to his MBA program.


U R kidding, of course? He's either an adult, or a child (unless he's disabled, and you are providing for a portion/all of his expenses).

Why do you think you should get a deduction to "enable" him?

Just wondering...

- Ron
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What?

Postby Nowizard » Wed Feb 04, 2009 12:08 pm

The belief was that there was a regulation related to the Lifetime Learning issues or another, related, issue. I think your comment about "enabling" is inappropriate in that you do not know the circumstances of a family and are certainly not qualified to make a diagnosis.

Tim
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Re: What?

Postby Ron » Wed Feb 04, 2009 12:13 pm

Nowizard wrote:The belief was that there was a regulation related to the Lifetime Learning issues or another, related, issue. I think your comment about "enabling" is inappropriate in that you do not know the circumstances of a family and are certainly not qualified to make a diagnosis.

Tim


Actually, you are incorrect in your assumption. I am (for one) the father of an "adult child". One who is collecting SSD for his condition of being a high performing autistic.

And yes, he does have a degree but unfortunately not able to hold a job due to his inability to hold a constructive dialogue, so I am well aware of the conditions (both federal and state) for support.

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Oh, me!

Postby Nowizard » Wed Feb 04, 2009 12:26 pm

Ron: The comment was about "enabling," not your accuracy in answering the question about deductions. You do not know the circumstances of our family in regard to why we would pay tuition for an adult child, though you do have reason to know the regulations allowing deductions for expenses benefitting one. The context you provided regarding your situation does help to explain the sarcastic response. Best wishes to you and your son!

Tim
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Postby rwwoods » Wed Feb 04, 2009 12:53 pm

You can claim an education credit only if you can claim the student as your dependent for whom you can claim an exemption. That does not appear to be the case. However, the student may be able claim the Lifelong Learning Credit.
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Postby Benn1950 » Thu Feb 05, 2009 12:13 am

It has always been my understanding that you must be eligible to claim the student as a dependent in order to claim the tuition deduction. You do not have to claim the student as a dependent, merely be eligible to claim him/her.

Jack
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Postby SurgPath » Thu Feb 05, 2009 1:14 am

Tim,

Check this out. This has helped me answer some of my own questions concerning my son's college expenses.

alan


http://www.irs.gov/pub/irs-pdf/p970.pdf
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Postby HueyLD » Thu Feb 05, 2009 7:10 am

Benn1950 wrote:It has always been my understanding that you must be eligible to claim the student as a dependent in order to claim the tuition deduction. You do not have to claim the student as a dependent, merely be eligible to claim him/her. Jack

Sorry Jack, your understanding is incorrect. In order to claim education tax benefits, the eligible student must be claimed as a dependent on your tax return.

What you've heard is the other side of the coin. If a parent is eligible to claim the student as a dependent but chooses not to do so, then the student can claim such benefits on his/her own tax return. In order for this to happen, the parent has to be eligible to claim the student as a dependent first.

This is among the lesser known and somewhat confusing tax loopholes.
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Postby Roverdog » Thu Feb 05, 2009 9:00 am

Unfortunately, I've read Pub 970 a few times. :) I believe Huey is correct.

In fact, there wording in the NY State tax form that essentially says, "If you are eligible to claim a child as your dependent but you elect not to (to allow them to claim the federal education credits), you may optionally still claim the child as a dependent on your state taxes."

So yeah, the child has to be a dependent for the parents to claim the credit. And there is an income limit for the tax credits (which is why the parents elect not to claim the dependent, so at least the child -- who presumably has a lower income -- could do so).

Bob
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Re: Deducting Education Expenses for an Adult Child:

Postby BruceM » Thu Feb 05, 2009 2:48 pm

Nowizard wrote: It would not make a difference in our choice to pay the tuition, but it would be nice to be able to claim the deduction.
Tim


If he has taxable income (line 43 of form 1040), and you are paying the tuition for him and he is not your dependent, he would be eligible to benefit from the Tuition and Fee deduction or the LLC. See p. 39 of Pub 970.

This may not help you, but it could give the student a bit of a financial assistance.

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Postby tadamsmar » Thu Feb 05, 2009 3:06 pm

Your child should be able to take a deduction for the tuition.

I bet the 1098T will come to him (the one enrolled), not to you, even though you paid directly.

That is what happens with my daughter. She graduated in May 2008 and I am unable to claim her as a dependent for the first time. But she will be able to take the deduction for the tuition I paid before May, even though I paid the bill.
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Thank You Very Much!

Postby Nowizard » Thu Feb 05, 2009 10:43 pm

The responses are appreciated. I have read Pub. 970. I would hope that the deduction, when taken by my son, would be above the line and not require itemization. Students don't typically have sufficient numbers of deductions to itemize.

Tim
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Postby tadamsmar » Fri Feb 06, 2009 11:20 am

What you've heard is the other side of the coin. If a parent is eligible to claim the student as a dependent but chooses not to do so, then the student can claim such benefits on his/her own tax return. In order for this to happen, the parent has to be eligible to claim the student as a dependent first


Have you got a source for that?

I don't see that in Pub 970. There is a rule that a student cannot take the tuition deduction if they qualify as someone's dependent even if they were not claimed as a deduction.
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Postby HueyLD » Fri Feb 06, 2009 12:29 pm

tadamsmar wrote:Have you got a source for that?

I don't see that in Pub 970. There is a rule that a student cannot take the tuition deduction if they qualify as someone's dependent even if they were not claimed as a deduction.

Read the Pub 970 again! See page 23.

Your understanding is correct in general. That is, if a taxpayer can be claimed as a dependent on another person's returns, he cannot claim that he is not a dependent on his own tax return. However, the higher education tax benefits do have this loophole that was put in the code by those with lobbying power.
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Postby tadamsmar » Fri Feb 06, 2009 1:31 pm

HueyLD wrote:
tadamsmar wrote:Have you got a source for that?

I don't see that in Pub 970. There is a rule that a student cannot take the tuition deduction if they qualify as someone's dependent even if they were not claimed as a deduction.

Read the Pub 970 again! See page 23.

Your understanding is correct in general. That is, if a taxpayer can be claimed as a dependent on another person's returns, he cannot claim that he is not a dependent on his own tax return. However, the higher education tax benefits do have this loophole that was put in the code by those with lobbying power.


Please quote the 970 to support your claim. I can't figure out what you are talking about.
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Thanks, Again!

Postby Nowizard » Fri Feb 06, 2009 11:39 pm

The responses are helpful. It is just as desirable for him to have the deduction since it helps him, even though his bracket is smaller than ours. It will not be when he completes his MBA at an excellent school based on the offer accompanying a summer internship he received today.

Tim
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Postby KCJayhawker » Sat Feb 07, 2009 12:39 am

Typically the lifetime learning credit is more beneficial then the tuition deduction. Make sure you son looks into what would create a greater tax benefit to him. I'm 99% sure it would be the credit. My in-laws pay for my wife's nursing school and that is what provides us the greatest benefit.
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