Can I Claim My Son's Education Expenses When He Is Not a Dependent?

When parents are paying for a child's college or graduate tuition, who gets to claim the education tax credits can become a heated discussion. With significant tax incentives, like the American Opportunity Tax Credit and the Lifetime Learning Credit potentially at stake, making sure you know who should be claiming the child's expenses is a big deal.

In order to claim an education tax credit, the taxpayer must be paying the expenses for herself, her spouse or her dependent. The IRS makes no exception for children who cannot be claimed as a dependent for one reason or another. In the case of the tuition and fees deduction, if the parent pays for education expenses and the student is not claimed as a dependent, the deduction is lost. However, the student might be able to use the American Opportunity Tax Credit or the Lifetime Learning Credit.

For the American Opportunity Tax Credit and the Lifetime Learning Credit, qualifying educational expenses must be claimed by the person who gets to claim the student's exemption. If the student can't be claimed as a dependent by someone else, the student gets to claim his own college tax deduction, and therefore gets to take the education credit. Even if someone else, such as a parent, is paying the costs directly to the school, the IRS treats the parent as making a gift to the son and then the son paying the expenses. Therefore, the son would get to take credit for the expenses paid by the parent. A child who is a full-time student can generally be claimed as a qualifying child until the year he turns 24. The son can't provide more than half his own support and must live with his parents for at least half the year, but an exception is made for the time he is away at school. If the son is 24 or older at the end of the year, he has to pass the more stringent tests to be claimed as a qualifying relative. This requires that the son not have more gross income than the annual exemption amount, and the parent must provide more than half the son's support.

Only qualifying educational expenses can be claimed on income taxes anyway. To qualify for any college tuition deduction, including the education tax credit, the student must be enrolled at a post-secondary school, such as a college, university, trade school or vocational school. For the Lifetime Learning Credit and the tuition and fees deduction, the educational expenses are limited to tuition and required fees. For the American Opportunity Tax Credit, books and supplies are also included. Room and board or other living expenses don't qualify for a tax credit.

The Tax Cuts and Jobs Act made sweeping changes in many areas that will affect you, but the education credits are largely left as is. Both the Lifetime Learning Credit and American Opportunity Tax Credit remain the same for the 2018 tax year.

If you neglected to claim education tax deductions on your 2017 tax return, you may still be able to file an amended return to get the credit. To claim either the American Opportunity Tax Credit or the Lifetime Learning Credit, you'll use Form 8863, Education Credits. The American Opportunity Tax Credit lets each student claim up to $2,500 in education expenses, with $1,000 of that being refundable. The Lifetime Learning Credit lets you claim up to $2,000 in education expenses.