I’m starting in fall and even though i ‘ve received scholarships and grants there is still money that needs to be paid in either the form of a loan or out of pocket. My parents are willing to pay the remaining portion just as long as at least part of it is tax deductable, if not they told me that i have to get the loans. They are going to be paying $5,000 per semester. I’m going to be attending a private school the tuition is $33,000 and the Room and Board is $10,000 totaling $43,000 per year. My scholarships/grants are just a little over $33,000 per year, so they would be paying the rest. Let me know if there are any credits/deductions that they can claim, thanks. P.S it’s going to be my first year in college if that makes a difference.
Your parents would not be able to take any tax deductions because the tax deduction is only for tuition and required fees. Scholarships and grants count as a deduction of tuition before any other expenses are considered. With your scholarship and grants adding up to more than your tuition, there will be nothing left to deduct.
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#1 by wecaraway on July 28th, 2009
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Absolutely.
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#2 by fieldplaya03 on July 28th, 2009
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It depends on whether you’re claiming dependent or independent status when you file for FASFA. My parents paid for a semester of college and i’m independent. I can almost guarantee you just because they put out the $$ for it doesn’t mean they can claim anything.
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Soph. in college
#3 by Judy on July 28th, 2009
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If you are a dependent of your parents for tax purposes, then they could take the education credit on their tax return for the amount of your tuition and fees that is paid out of pocket.
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#4 by Houyhnhnm on July 28th, 2009
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There are many ways to get some tax relief on college tuition, and the vast majority if not all taxpayers qualify for one or more of these:
Hope credit
Lifetime education credit
Straight deduction up to $3,000
Section 529 plans
Coverdell Education IRA’s
There is a whole booklet on this available from the IRS. Search on education expense at irs.gov. If your family will make less than $90,000 in 2007, the Hope credit would probably provide the most immediate tax help. If you’re smart enough to get into a selective private school you can probably figure out some way to find your parents some tax break. To find the best strategy you will have to do a lot of studying, or find an expert in the field. Avoiding $40,000+ of debt is worth a lot of work, however.
Good luck,
Houyhnhnm
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#5 by mcmufin on July 28th, 2009
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Go to the IRS website and download the publications regarding "Qualified Higher Education Expenses" or "QHEE’s." Those publications will tell you what can be deducted (it’s a lot, actually) and how to do it. They will also help you an dyour parents plan for paying or college.
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#6 by PepsiLime on July 28th, 2009
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If you are still your parents dependent then they might get a break for paying part of your tuition. Since you are in your first year of college, you would qualify for the Hope Credit or possibly the tuition and fees deduction. Both the credit and the deduction though are dependent on how much income your parents have. So it possible that their income level may be too high to qualify for either. I have attached a link to the Hope Credit and the tuition and fees deduction. Hope credit is also good for second year of college, Lifetime Learning Credit is good any year after 1st & 2nd.
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http://www.irs.gov/publications/p970/ch02.html
http://www.irs.gov/publications/p970/ch06.html
#7 by bkwrm006 on July 28th, 2009
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Your parents would not be able to take any tax deductions because the tax deduction is only for tuition and required fees. Scholarships and grants count as a deduction of tuition before any other expenses are considered. With your scholarship and grants adding up to more than your tuition, there will be nothing left to deduct.
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#8 by ninasgramma on July 28th, 2009
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For the Fall semester, even if you borrow $5,000 for your room and board and personal expenses, your parents are still providing over half of your support and they can claim you on their tax return. Your tax-free scholarships and grants are not support provided by you.
If your parents pay tuition and fees, they can get either
Tuition and Fees Deduction
Hope Credit, or
Lifetime Learning Credit.
They cannot take a tax deduction for room and board or your personal expenses. So, if you have grant money that does not have to go towards tuition, use that for room and board and personal expenses. Your parents’ money should go toward tuition.
It is more complicated in 2008 when you attend school for the full year. If you borrow $10,000 in 2008 to pay for your own expenses other than tuition and fees, unless your parents also provided $10,000 for your support, then your parents cannot claim you on their tax return at all. They may want to take this into consideration before they have you borrow so much money to live on that you are no longer their dependent.
If you do borrow money for education, even for room and board, then you can deduct the interest on that loan when you start to repay it.
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