Question: My son is claimed as a dependent on my parents income tax.
The accountant that filed out their income tax stated that they can not claim the Hope Scholarship tax credit or the lifetime learning credit because they didn’t pay his college tuition. My son has his college loans in his name and are payable 4yrs and 6months down the road. WHO can take this tax credit and when can it be taken?

Answer: The Hope Scholarship is for freshmen or sophomores, whereas the Lifetime Learning Credit is for everyone else. Since he is your dependent, if he *or* you paid some amount out of pocket for tuition and mandatory fees, you are eligible for some credit. You get a certain percentage of what you (or he) paid, up to $1500 (which you get when you’ve paid $5000 or more for tuition & fees). If you had been eligible for the Lifetime Learning Credit, the most you could get is a $1000 credit when $5000 or more was paid out of pocket for tuition & fees.

Since he also has loans, you may want to note that there’s a deduction for interest paid on student loans as well. There’s a simple little worksheet somewhere in the 1040A/1040 booklet (never do 1040EZs, don’t know about those) that gives you the amount of your credit. I don’t know if that credit goes to the parent or not… I’m afraid I don’t remember that from my on-campus Volunteer Income Tax Assistance crash course.

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