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Ask an expert: Can I claim any higher education tax benefits for a non-dependent child?
http://www.savingforcollege.com/articles/ask-an-expert-can-i-claim-any-higher-education-tax-benefits-for-a-non-dependent-child-751

Posted: 2015-04-09

by Marguerita Cheng

CEO of Blue Ocean Global Wealth

Can I claim any higher education tax benefits for a non-dependent child?

No, you cannot claim an education credit for a non-dependent. In order for you to claim an education credit, the student must be a dependent claimed as an exemption on your tax return.

Qualified education expenses paid directly to an eligible educational institution for your dependent under a court-approved divorce decree are treated as paid by your dependent.

If you claim an exemption for a dependent college student, only you can include any expenses that you paid when determining the amount of the education tax credit. If neither you nor anyone else claims the student as a dependent, only the dependent can include any expenses you paid when calculating the education tax credit.

Someone other than you, your spouse, or your dependent (i.e. a relative or former spouse) can make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. In this situation, the student is deemed to have received the payment from the other person and, in turn, paid for the educational expenses at the institution. If you claim an exemption on your tax return for the student, you are considered to have paid the expenses.

In 2014, Erica Johnson makes a payment directly to an eligible educational institution for her granddaughter Laura’s qualified education expenses. For purposes of claiming an American opportunity credit, Laura is deemed to have received the money from her grandmother and, in turn, paid for the qualified education expenses herself. Unless someone else claims Laura as a dependent on the 2014 tax return, only Laura is eligible to use the tax credit. If anyone, such as Laura’s parents claims her as their dependent on their 2014 tax return, whoever claims the exemption may be eligible to claim an education tax credit. If anyone else claims Laura as a dependent, Laura cannot use the education tax credit.

To learn more about your eligibility for specific educational tax credits and deductions, visit the IRS website.

This interactive application on the IRS website can help you determine your eligibility for certain education tax credits, including the American Opportunity Credit and the Lifetime Learning Credit.

Be sure to have the following information available:

  • Filing status
  • Student’s enrollment status
  • Your adjusted gross income
  • Who paid the expenses, when the expenses were paid and for what academic period
  • If any expenses associated with higher education were paid from tax-exempt accounts


Marguerita M. Cheng is the Chief Executive Officer at Blue Ocean Global Wealth. Prior to co- founding Blue Ocean Global Wealth, she was a Financial Advisor at Ameriprise Financial and an Analyst and Editor at Towa Securities in Tokyo, Japan. Marguerita has been quoted and featured in numerous national publications. Marguerita is a spokesperson for the AARP Financial Freedom Campaign, a columnist for Be Inkandescent Magazine, and a personal finance contributor to Market Intelligence Center and Washington Business Journal. She is a CFP® professional, a Chartered Retirement Planning CounselorSM, and a Certified Divorce Financial Analyst. As a Certified Financial Planner Board of Standards (CFP Board) Ambassador, Marguerita helps educate the public, policy makers, and media about the benefits of competent, ethical financial planning. She serves as a subject matter expert for CFP Board, contributing to the development of examination questions for the CFP® Certification Examination. Marguerita also volunteers for CFP Board Disciplinary and Ethics Commission (DEC) hearings. She proudly serves on the FPA National Board of Directors and is a member of its finance committee. Marguerita is the 2013 Chair of the Financial Planning Association of the National Capital Area (FPA NCA). As a candid and passionate supporter of financial literacy and capability, she collaborates with the Virginia Council on Economic Education (VCEE), and teaches financial planning and investment management at the Personal Finance Institute at George Mason University, where she helps educators enhance their understanding of economics and personal finance. She studied at Keio University in Tokyo, Japan, and earned her B.S. in Finance and her B.A. in East Asian Language and Japanese Literature from the University of Maryland, College Park. Marguerita is a recipient of the Ameriprise Financial Presidential Award for Quality of Advice and the prestigious Japanese Monbukagakusho Scholarship.



CEO of Blue Ocean Global Wealth

Can I claim any higher education tax benefits for a non-dependent child?

No, you cannot claim an education credit for a non-dependent. In order for you to claim an education credit, the student must be a dependent claimed as an exemption on your tax return.

Qualified education expenses paid directly to an eligible educational institution for your dependent under a court-approved divorce decree are treated as paid by your dependent.

If you claim an exemption for a dependent college student, only you can include any expenses that you paid when determining the amount of the education tax credit. If neither you nor anyone else claims the student as a dependent, only the dependent can include any expenses you paid when calculating the education tax credit.

Someone other than you, your spouse, or your dependent (i.e. a relative or former spouse) can make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. In this situation, the student is deemed to have received the payment from the other person and, in turn, paid for the educational expenses at the institution. If you claim an exemption on your tax return for the student, you are considered to have paid the expenses.

In 2014, Erica Johnson makes a payment directly to an eligible educational institution for her granddaughter Laura’s qualified education expenses. For purposes of claiming an American opportunity credit, Laura is deemed to have received the money from her grandmother and, in turn, paid for the qualified education expenses herself. Unless someone else claims Laura as a dependent on the 2014 tax return, only Laura is eligible to use the tax credit. If anyone, such as Laura’s parents claims her as their dependent on their 2014 tax return, whoever claims the exemption may be eligible to claim an education tax credit. If anyone else claims Laura as a dependent, Laura cannot use the education tax credit.

To learn more about your eligibility for specific educational tax credits and deductions, visit the IRS website.

This interactive application on the IRS website can help you determine your eligibility for certain education tax credits, including the American Opportunity Credit and the Lifetime Learning Credit.

Be sure to have the following information available:

  • Filing status
  • Student’s enrollment status
  • Your adjusted gross income
  • Who paid the expenses, when the expenses were paid and for what academic period
  • If any expenses associated with higher education were paid from tax-exempt accounts


Marguerita M. Cheng is the Chief Executive Officer at Blue Ocean Global Wealth. Prior to co- founding Blue Ocean Global Wealth, she was a Financial Advisor at Ameriprise Financial and an Analyst and Editor at Towa Securities in Tokyo, Japan. Marguerita has been quoted and featured in numerous national publications. Marguerita is a spokesperson for the AARP Financial Freedom Campaign, a columnist for Be Inkandescent Magazine, and a personal finance contributor to Market Intelligence Center and Washington Business Journal. She is a CFP® professional, a Chartered Retirement Planning CounselorSM, and a Certified Divorce Financial Analyst. As a Certified Financial Planner Board of Standards (CFP Board) Ambassador, Marguerita helps educate the public, policy makers, and media about the benefits of competent, ethical financial planning. She serves as a subject matter expert for CFP Board, contributing to the development of examination questions for the CFP® Certification Examination. Marguerita also volunteers for CFP Board Disciplinary and Ethics Commission (DEC) hearings. She proudly serves on the FPA National Board of Directors and is a member of its finance committee. Marguerita is the 2013 Chair of the Financial Planning Association of the National Capital Area (FPA NCA). As a candid and passionate supporter of financial literacy and capability, she collaborates with the Virginia Council on Economic Education (VCEE), and teaches financial planning and investment management at the Personal Finance Institute at George Mason University, where she helps educators enhance their understanding of economics and personal finance. She studied at Keio University in Tokyo, Japan, and earned her B.S. in Finance and her B.A. in East Asian Language and Japanese Literature from the University of Maryland, College Park. Marguerita is a recipient of the Ameriprise Financial Presidential Award for Quality of Advice and the prestigious Japanese Monbukagakusho Scholarship.



 

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