Tax Related Question (credit, school, university)

[marykate1]

My brother is my dependent and he lives with me! He goes to university and pay international tuition fees. Since, he has to pay international tuition our whole family contributes small amounts to make up for his fees. Now it is tax time and my family members are asking me to claim all his fees. I have only contributed a small amount like $1000. How should I go about claiming tax deductions on the education expenses for my brother which was contributed by the whole family and not only me!

[debzkidz]

This sounds like a question you need to be asking a tax accountant, not people on a message board.

[tdhg566]

I may be able to help you, as I get this question frequently from my clients this time of year

First, you may want to read IRS Pub 970 - Tax Benefits for Education. But for the American Opportunity Credit, the benefit follows the dependency exemption regardless of who pays the bills. So if you get his exemption, you can claim his credit(s). Other education deductions follow different rules.

Don't get hung up on family members paying parts of the bill. You get the benefit regardless. If you have trouble accepting this, think of the payments from family members as first being gifts to the student, who then paid the bills. Anyone can give anyone else, however related or not, $13,000 a year before any gift tax consideration is triggered. Consider payments from family members as being gifts.

[marykate1]

@tdhg566,

Thanks for the response! The problem is that some of my family members gave checks made directly to my brother(student). Some also made a check directly to the university. If later IRS asks me to show where I have personally paid the tuition fees then I have no record for all the fees $15K.

[Houston_2010]

There is a financial forum in City Data you may be able to get more answers about your question

[marykate1]

Seems like if the payment is made by others then I cannot claim that payment.


Expenses paid by others. Someone other than you, your
IF your dependent
spouse, or your dependent (such as a relative or former
is an eligible
spouse) may make a payment directly to an eligible educastudent and you... AND... THEN...
tional institution to pay for an eligible student’s qualified
claim an exemption you paid all only you can deduct
education expenses. In this case, the student is treated as
for your dependent qualified education the qualified education
receiving the payment from the other person and, in turn,
expenses for your expenses that you
dependent paid. Your dependent paying the institution. If you claim, or can claim, an exempcannot take a tion on your tax return for the student, you are not considdeduction. ered to have paid the expenses and you cannot deduct
claim them. If the student is not a dependent, only the student
an exemption your dependent no one is allowed to
for your dependent paid all qualified take a deduction. can deduct payments made directly to the institution for his
education or her expenses. If the student is your dependent, no one
expenses
can deduct the payments

[tdhg566]

Originally Posted by marykate1

Seems like if the payment is made by others then I cannot claim that payment.
...

I am sorry you are making this so hard. Is there something you haven't told us about your situation? Based on what you said, I told you the answer, and yet you continue seeking ways to NOT take the education credit for your dependent. That's fine. Your money. But one more time: you are entitled to the American Opportunity Credit (AOC) for expenses paid by you, by your dependent, or by others, including money paid directly to the school. Please see page 14 of pub 970. It spells this out clearly, followed by numerous examples.

Do NOT read past page 16 unless the AOC doesn't apply to you. ?is that the case? (Pub 970, pages 8-13). The Lifetime Learning Credit and Tuition and Fees Deduction have slightly different rules and indeed, you may not be eligible for all of those credits should you need to take them. But you can only take one of the credits, so if you get the AOC, the qualification rules for the other credits are immaterial.

Good luck. I'm no longer watching this thread.