<p>Ok so the story is that my daughter's father and I have been divorced for 13 years and have always done a 50/50 joint custody with no exchange in child support. All bills were split between us and we have taken turns claiming her on our tax returns. We are both remarried, I have one child with my husband and his wife has three children from a previous marriage. Now that our daughter is getting prepared for college we have always said we want to help contribute to her college tuition. My fear is that because we claim her on opposite years of taxes if I contribute more than he does will I be just assisting him with his tax credits and not getting the same assistance from him. I am not even sure that the tax benefits are enough that this should be a concern could any of you that have already started the process help me out with this?</p>
<p>I assume this was not addressed in your divorce. If you’ve saved money you pay in the year you take her on your taxes and he pays on the year he takes her?</p>
<p>It was not addressed in our divorce, you are correct.</p>
<p>So if you are in agreement as to how much you both will pay, can you pay in 2015 and take her on 2015’s taxes and vice versa? </p>
<p>Are you talking about the AOTC? I think that can only be taken for a child taken as a dependent (although often the tax code does allow you to take things for a child you COULD claim for a dependent but don’t because of a divorce decree, like HOH). Only one parent can take it, even if both paid money toward the tuition and expenses.</p>
<p>You are just going to have to work it out with your ex as to who takes it which year. It would be nice to take it in the year opposite the year you get the dependent deduction as then you’d have about the same amount in tax liability every year, but check Pub 970 to see if you can only take the AOTC in year you have her as a dependent.</p>
<p>""“My fear is that because we claim her on opposite years of taxes if I contribute more than he does will I be just assisting him with his tax credits and not getting the same assistance from him.”""</p>
<p>???</p>
<p>Four years of college, 2 households, 2 years of tax credits for each parent. What is the issue???</p>
<p>It seems like if you take turns paying by calendar year then you would be able to take turns claiming her by calendar year and thus get credit for what YOU each paid?</p>
<p>We have not discussed how much each would pay toward college just that we would both help as we could afford to so that she didn’t have as much student loan debt when she finished. Maybe I do not understand how it works…Is the tax credit a fixed credit or is it based on the amount of tuition paid in during the previous year?</p>
<p>The student can only borrow $5500 as a freshman. All the other costs will have to be borrowed or cosigned by the parent.</p>
<p>The tax credit is based on the tuition, but there is an upper limit which your costs will generally exceed. It also starts to phase out at higher income levels. There are also differing rules for the state vs federal computations, depending on your state.</p>
<p>You can read about the AOTC and other education tax topics here:</p>
<p><a href=“http://www.irs.gov/pub/irs-pdf/p970.pdf”>http://www.irs.gov/pub/irs-pdf/p970.pdf</a></p>
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<p>It is probably better to come to a written agreement on the amount of contributions (that both you and the ex can comfortably afford) before your daughter makes her application list, so that she can make a list that is financially realistic. “We would both help as we could afford” will make it difficult for her to determine whether a given college is financially realistic (when looking at net price calculators, merit scholarships, etc.). Try not to have her encounter the heartbreak in April of getting college acceptances that are all too expensive.</p>
<p>^^^^</p>
<p>Very true…very good advice. You all need to be dealing with REAL numbers so that an appropriate list can be made. </p>
<p>As mentioned upthread, the schools that give the best aid will likely require the info from all parents and step-parents. </p>
<p>The tuition tax credit is means-tested so one or both sets of parents may not even qualify. </p>
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<p>Your D can only borrow the following amounts:</p>
<p>5500 frosh
6500 soph
7500 jr
7500 sr</p>
<p>So, unless each household takes turn co-signing a bunch of loans, you need to deal with REAL NUMBERS. And, co-signing loans is risky…the student may not be able to pay them back, and parents get stuck.</p>
<p>If you could provide some more info, we can help give more info:</p>
<p>Home state
D’s stats (including SAT breakdown)
schools that she is considering
possible majors and career goals</p>
<p>If you are concerned about how one parent may unfairly get a tax credit, you should be MORE concerned about whether the other parent is going to pay his fair share…that is more important. If he only pays $2k per year and you pay $15k per year…that will be a much bigger issue. lol</p>
<p>I agree that figuring out how her EFC will be calculated for different schools should be a more pressing matter than the tax issue. The financial gain or hit will certainly be much larger. Some schools use only the financial information of the custodial parent while others use the information from both families including new spouses. There are many moving parts here.</p>
<p>My friend and her ex agreed to split the final bills 50-50. He earns much more than she does, but she worked to find colleges where, after finaid and merit (and minus the standard student loans) the costs were affordable. So, there was no one side ‘contributing more.’ </p>
<p>if you are uncertain he’ll pay 50%, you need to find colleges that are affordable, as everyone says, and you may need to revise the thing about claiming your child in alternate tax years. With colleges, it can also matter which parent the child actually lives with. See what Pub 970 tells you. Because the info you need can appear in several sections, it can also help to google for specific questions within 970. You will need to build your understanding and put this together very carefully. </p>
<p>Isn’t the goal to give your D the best education you can which is consistent with her goals and aspirations, while being affordable to both households??? Someone is likely to get “screwed” if by that you mean pay more than the other. But if both households are contributing what they can without impoverishing themselves or raiding their retirement assets-- isn’t that OK if one parent ends up paying more than the other???</p>
<p>I know a lot of divorced families and the idea that everyone is kicking in the same amount, post-tax is a little delusional, especially if that wasn’t spelled out in court. Stuff changes during college- the kid wants to study in Prague for a semester which might be cheaper than the home university. So the parent who “saved” on that tuition ends up footing the bill for some extra travel expenses that summer. Or the kid takes a year off between junior and senior year. Or one parent moves out of state changing the parameters entirely.</p>
<p>From what I’ve observed… you need two meetings. One with the ex, where you both calculate what you can afford to contribute- from savings, from current income, and from future income (i.e. the debt each parent may or may not be able to take on). You then run the numbers according to the financial aid calculators to see if the school’s assessment of what you can afford calibrates to what they THINK you can afford. If the numbers are roughly consistent (i.e. the parental contribution equals your EFC) then you proceed making an application list.</p>
<p>If the numbers are NOT consistent (huge gap between the parental funding and what the schools think you can pay) then you move to plan B- merit schools, depending on your D’s stats, living at home and commuting to an affordable option with no room and board to consider, etc.</p>
<p>Then you sit down with the D (meeting number two) and walk her through the options. United front, this is what we are doing as a family for your education. Don’t let her feel like her education is being sacrificed on the altar of “even steven”; she doesn’t need to know the mechanics of which family pays what. The united front is what you can afford to contribute; she gets to make a list which is affordable based on that.</p>
<p>But going into the process assuming that you are going to find a college which meets your D’s needs, AND where neither parent is willing to fund anything more than what the other can afford is going to be tough. Mom has a good year- that’s great. Maybe tuck away another thousand bucks. Mom has a bad year- so Dad takes over paying lab fees and books in addition to what he’s “agreed to” so the D doesn’t have to derail her Chemistry major. D wins a fellowship in France for the summer- fully paid room and board once she gets there, and it will really help with grad school admissions- but she needs a plane ticket- Dad is tapped out so Mom pays for that above and beyond her “agreed to” contribution. Etc.</p>
<p>A little flexibility on the sharing as long as nobody is impoverished is going to help your D get through her education with relationships with both parents intact.</p>
<p>I think it is great you and your ex are willing to share your kid’s college expenses, neither one of you is walking away. Blossom gave some good advice. It is not easy when parents are not together.</p>
<p>You could agree that the parent who gets the education tax credit (max of $2500 on $4000 of tuition paid with non tax-advantaged dollars) gives the $2500 (back) to the student, in addition to the agreed-upon amount of mutual tuition assistance.</p>
<p>I would also suggest getting your daughter’s dad involved in the college search process after you have discussed finances. Maybe have her visit one of her top picks with him so he gets invested in it too…so it isn’t “this is what they are making me pay for” but “this is where my daughter is going”</p>
<p>Frankly, if the two of you have gotten this far providing for her equally and alternating claiming her on your taxes without litigation, I think you’ll be just fine working out the college cost division as well. You do not have a problem. Just keep doing as you have been doing.</p>