24 yo daughter not eligible for an lifetime learning credit

Forum|Forum|2 years ago
February 9, 2024
2 replies
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A 24 year old "kid" that made more ~$4,200 (actually, $11,500) in 2023 has effectively aged out of being their parents tax dependent, but at least the kid started a real job by October 2023 after graduating with a Masters in August. Kid (Dad, really) does the 1040 as "single" on TurboTax claiming 1 as the kid. Dad already claimed the Amer. Oppty Credit for 4 years in the past. Spent about $4,500 in tuition and books in 2023. Turbo Tax says:

"You can't claim an education tax break. Based on what you've entered so far you are not eligible for an education credit. Here is why you may not qualify: 1. Somebody else can claim you as a dependent on their return 2. There is no taxable income in your return 3. There were no net qualified education expenses."

So, 1 & 3 don't apply as described above. Does 2. apply because kid's gross income was less than $13,850?

Best answer by xmasbaby0

The Lifetime Learning Credit is non -refundable. It can only be used to reduce a tax liability. And your daughter did not have enough income to have a tax liability. Her standard deduction is $13,850. She earned less---so all of her income is already "tax free." And ----since you cannot claim her as a dependent now, you cannot use the credit on your return.

xmasbaby0Answer

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BeenThereDoneThat17Author

Thanks to xmasbaby0 for holding my hand and confirming my suspicions. I told my kid they were in a tax "donut hole" since she made too much to be a tax dependent and too little to get credit on tuition costs 😉