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Can you help me understand the American Opportunity Tax

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Can you help me understand the American Opportunity Tax Credit?
Submitted: 1 month ago.Category: Finance
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Answered in 5 minutes by:
12/29/2017
Financial Professional: Lev, Tax Preparer replied 1 month ago
Lev
Lev, Tax Preparer
Category: Finance
Satisfied Customers: 31,201
Experience: Personal Investment, Tax Preparation
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What are your specific questions regarding this credit?

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Customer reply replied 1 month ago
I am divorced, my ex claimed my daughter last year on the AOTC. She does not live with either one of us at this point. She receives her mail at my home address. I partially support her and I pay the balance of her tuition with 529 accounts that I put money in when she was young. How do I know if I am qualified to claim her?
Financial Professional: Lev, Tax Preparer replied 1 month ago

Whoever from parents is eligible to claim the child as a dependent is entitled to claim the American Opportunity Tax Credit.

If neither parent is eligible - and the child files her own tax return - she will be allowed to claim the American Opportunity Tax Credit.

So - the question will be if either you or you ex-spouse may and will claim your daughter as a dependent

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Customer reply replied 1 month ago
My daughter is 21, what makes a parent eligible to claim a 21 yr old as a dependent?
Financial Professional: Lev, Tax Preparer replied 1 month ago

See IRS publication 501

You can't claim a person as a dependent unless that person is your qualifying child or qualifying relative.

https://www.irs.gov/pub/irs-pdf/p501.pdf

see page 12

Tests To Be a Qualifying Child Tests To Be a Qualifying Relative
1. The child must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of them.
2. The child must be (a) under age 19 at the end of the year and younger than you (or your spouse if filing jointly), (b) under age 24 at the end of the year, a student, and younger than you (or your spouse if filing jointly), or (c) any age if permanently and totally disabled.
3. The child must have lived with you for more than half of the year.
4. The child must not have provided more than half of his or her own support for the year.
5. The child must not be filing a joint return for the year (unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid).

.

Tests To Be a Qualifying Relative

1. The person can't be your qualifying child or the qualifying child of any other taxpayer.
2. The person either (a) must be related to you in one of the ways listed under Relatives who don't have to live with you, or (b) must live with you all year as a member of your
household (and your relationship must not violate local law).
3. The person's gross income for the year must be less than $4,050.
4. You must provide more than half of the person's total support for the year.

.

So if based on either tests your determine and claim your daughter as a dependent - you will be eligible to claim AOTC for your daughter.

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Customer reply replied 1 month ago
if my daughter is off to school (not living with me for more than half of the year) even though I am paying for more than half of her expenses I cannot claim her as a dependent?
Financial Professional: Lev, Tax Preparer replied 1 month ago

If your daughter is temporary not living at home because of school - she is considered as living with you - and will be your qualifying child.
If your daughter is NOT living with you and not living with your ex-spouse - she still may be your dependent if her income below $4050 as qualifying relative

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Lev
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Lev, Tax Preparer
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Satisfied Customers: 31,201
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