AOTC - parents will not file

[ordinarylives]

IF a student’s parent does not file (SSI is only source of income), but student has income and will file, can the student claim her own AOTC? She cannot be claimed as a dependent on anyone else’s tax return. (And, yes, she understands she is still a dependent for FAFSA).

[twoinanddone]

The parent can file just to claim the $1000 AOTC if the student is a dependent.

Does the student support herself? Does she pay rent and for utilities and electricity? Does she meet the requirements to claim herself under the IRS regulations?

[ordinarylives]

I believe so. She does not live with parents, works full time, and earns enough that parent would have a very difficult time claiming more than 50% support.

[happymomof1]

If she is independent for taxes, she files the AOTC for herself.

[mommdc]

Is she at least a half time student?

[twoinanddone]

^^ She’d have to meet all the tax requirements for the AOTC. She may also not have much tax owed, so would benefit from the $1000 refundable credit but not the $1500 of non-refundable credit as she’d have her personal exemption and the standard deduction, totally $10,400.

[4kidsdad]

can the student claim her own AOTC?

OP, Why? Do you have large tax liabilities that could be offset by AOTC? If you think about the refundable AOTC, see IRS Pub 970

Refundable Part of Credit

Forty percent of the American opportunity credit is refundable for most taxpayers. However, if you were under age 24 at the end of 2014 and the conditions listed below apply to you, you cannot claim any part of the American opportunity credit as a refundable credit on your tax return. Instead, your allowed credit (figured on Form 8863, Part II) will be used to reduce your tax as a nonrefundable credit only.

You do not qualify for a refund if items 1 (a, b, or c), 2, and 3 below apply to you.

You were:

Under age 18 at the end of 2014, or

Age 18 at the end of 2014 and your earned income (defined below) was less than one-half of your support (defined below), or

Over age 18 and under age 24 at the end of 2014 and a full-time student (defined below) and your earned income (defined below) was less than one-half of your support (defined below).

At least one of your parents was alive at the end of 2014.

You are filing a return as single, head of household, qualifying widow(er), or married filing separately for 2014.

Earned income. Earned income includes wages, salaries, professional fees, and other payments received for personal services actually performed. Earned income includes the part of any scholarship or fellowship grant that represents payment for teaching, research, or other services performed by the student that are required as a condition for receiving the scholarship or fellowship grant. Earned income does not include that part of the compensation for personal services rendered to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered.
If you are a sole proprietor or a partner in a trade or business in which both personal services and capital are material income-producing factors, earned income also includes a reasonable allowance for compensation for personal services, but not more than 30% of your share of the net profits from that trade or business (after subtracting the deduction for one-half of self-employment tax). However, if capital is not an income-producing factor and your personal services produced the business income, the 30% limit does not apply.
Support. Your support includes food, shelter, clothing, medical and dental care, education, and the like. Generally, the amount of the item of support will be the amount of expenses incurred by the one furnishing such item. If the item of support is in the form of property or lodging, measure the amount of such item of support by its fair market value. However, a scholarship received by you is not considered support if you are a full-time student. See Publication 501 for details.
Full-time student. You are a full-time student for 2014 if during any part of any 5 calendar months during the year you were enrolled as a full-time student at an eligible educational institution (defined earlier), or took a full-time, on-farm training course given by such an institution or by a state, county, or local government agency.

[ordinarylives]

Why? Because if mom doesn’t file and the student paid the school, why shouldn’t someone get the credit? (This is not me/my child, btw. This is an advisee, and I’ll probably send her to the VISTA program, now headed by one of our recent grads, with a head’s up about claiming the credit. I’ll help with FAFSA, but not taxes.)

[noname87]

Why won’t the mother file a return? You can still file a return even if you are not required to and claim the AOTC.

[ordinarylives]

I don’t know. Student just says she doesn’t. And, with the full time job, the student probably makes enough that mom can’t claim to provide for more than 50% of her expenses on what she brings in from SSI (student doesn’t live at home). So, student is independent for taxes, and mom couldn’t claim anyway.

[twoinanddone]

There are lots of things about the tax code that are unfair, and this seems to be one of them if you are 18-24 years old and an independent taxpaying adult who happens to go to college and wants to take the AOTC.

There were many years I couldn’t take the child credit and no one else could either and it was just ‘wasted’. That happens. Maybe one of the other tax deductions/credits for tuition would work?

[mommdc]

Yes, good idea, what are the rules of the other education credits?