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Education Credit Questions
The government may have taken the position to help support education by offering
credits to decrease
. One may be attending college here in the US on a VISA that may be eligible for education tax credits. Questions and concerns pertaining education credit often arise like the ones below that have been asked by many different individuals.
What is an education credit?
Education tax credits were designed to offset the costs of education. The American Opportunity (Hope Credit extended) and the Lifetime Learning Credit are education credits that might save as much as 100% of the
on one’s federal
. Questions and concerns of who may be eligible for tax credits and what education tax credits are available have been answered below by an Expert.
Can a nonresident alien who qualifies to be treated as a resident alien apply for education credits?
When a person is here on a certain VISA they may have the choice to file as a resident alien or a nonresident alien. If the individual has filed as a resident alien they may then qualify for an education credit. Filing as a nonresident would not allow this individual to claim the credit.
Which parent is allowed to claim the education tax credit, custodial parent or the parent paying for the education?
Guidelines that may determine which parent has the right to claim a child as a dependent and or claim the education credits are as follows:
The child is under age 13
The parent who may have provided over half of the support for the year
The parent who had custody of the child for more than half the year
The parent meeting this criterion may be qualified as the custodial parent; this being the one that usually has the authorization to claim the child as a dependent. Some parents choose to alternate the years. In the event this may not be stipulated in a divorce or custody agreement, it may be best for one to pay the school directly. With receipts showing that the parent paid for the child’s education may allow them to claim the education tax credit for the child.
What is an acceptable source for proof of payment, to support an individual’s claim for education credits to the IRS?
A copy of a receipt for tuition paid would be the best form of proof in supporting the tuition charges an individual may have claimed on an education tax credit. It is the
’s responsibility to provide proof of payment. Receipts or cancelled checks may also be a viable source for proof of payment.
Is the tax credit different when filing for Hope Education Credit as opposed to Lifetime Education Credit?
The maximum allowance for education credits differ in both, having their own criteria that must be met to qualify. A student may not claim both the Hope credit and Lifetime learning credit for the same tax year. You cannot take both an education credit and a
for tuition and fees for the same student in the same year. Tuition expenses that were paid for by non-taxable scholarships, fellowships, employer education assistance, reimbursement, or distributions from qualified savings plans may not qualify toward a credit allowance.
An education tax credit may reduce the amount of income tax you may have to pay. Many of these credits are based not only on one’s income but
may also be a determining factor of eligibility. Many students seeking higher education may not be aware of education credits that may be available. Experts are available to provide knowledge to those individuals who are not well aware of education credits that can be used.
Recent Education Credit Questions
why would I get a notice of deficiency for claiming my 19 year old son full time college s
why would I get a notice of deficiency for claiming my 19 year old son full time college student as dependent with education credit..
Question for Stephen G - A college student files her own return
Question for Stephen G - A college student files her own return but does not claim herself. Her parents claim her & pay her tuition. A 1099-Q is issued to the student showing her ssn as the recipient. Additionally, block 6 is not checked. The Gross distribution is 50,407, the earnings are 17,193 & the basis is 33,214. The IRS recently sent the student a notice indicating earnings of 17,193 were reported to them. A 1098-T was also issued showing tuition payments of 35,106. As the student is not claiming herself & did not pay the tuition, is there any way she can report the tuition payments on her return & if not, can she try to have the ssn changed on the '529' account which made the distribution from hers to one of her parents?
In Dec 2013, I received IRS audit letters requesting 1098-T
In Dec 2013, I received IRS audit letters requesting 1098-T and school transcrip for my 3 children (dependent) Education credit & American Opportunity credit for tax year 2012. In early 2014 (Jan/Feb) I mailed in the 3 (2012) 1098-T forms, 3 full transcrips (staring to last quater/semester of 2013 for my 3 children and my bank records that I paid for their tuitions in 2012.
Yesterday, I received IRS tax deficiency of $7,000 + $1,400 penalty + $318.64 int. for a total of $8,718.64 with the explanation that I did not establish the education credits for my 3 children (dependent). The letter also tell me that I have 90 days to file a petition with the US tax court.
Please advise what should I do since the 1098-T forms, school transcrips and my bank payment records for the children tuition seemed to be ignored by the IRS.
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