Dependent status of college student is key to determining tuition deduction

Seventh in a series

Tax Tips

Your Money

March 14, 2004|By Lorene Yue

Who foots the college tuition bill and whether the student can be claimed as a dependent are determining factors in claiming a tuition deduction.

If you paid for your 25-year-old son who lives at home to attend college full time, you can't get the tuition deduction because he does not qualify as a dependent. He, however, can get the deduction as long as he meets the modified adjusted gross income requirement, even if he didn't pay a cent.

If your 19-year-old daughter paid her own way, then you get to lay claim to the credit, as long as she can be claimed as your dependent, even if she files her own return.

Tax filers can deduct up to $3,000 worth of college tuition and fees in 2003. And you don't have to itemize your deductions to claim it. You just have to fill out a 1040A or 1040 form. Single tax filers can claim a tuition deduction if their modified adjusted gross income is $65,000 or less. Married couples filing jointly can claim it if their modified adjusted gross income is $130,000 or less. Married couples filing separately cannot claim tuition deduction.

If you already claimed a Hope Scholarship or lifetime learning credit, you'll have to sit out this dance. You can't claim both a credit and a deduction for the same person.

Another catch: If you used money from a Coverdell ESA, once known as an Education IRA, to foot the tuition costs, then you cannot claim either an education credit or tuition deduction on that portion. Doing so would be double-dipping, said John Evanich, tax principal for Haggett Longobardi in Glastonbury, Conn., since money taken out of a Coverdell ESA for tuition is withdrawn tax-free.

Next week: Bunching deductions.

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