Claimed Dependent - Eductation - Split Costs - Divorce - How to handle?

Forum|Forum|2 years ago
February 6, 2024
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Previously divorced

I claim my daughter per agreement

Daughter has no income

She started college and I got a 1098-T

Her tuition was split between myself (paid out of pocket) and her mom (via 529).

Plugging in the 1098-T said it didn't help my taxes at all.

Is there anything I'm mandated to do?

Could her mom somehow claim the 529 payment even though I claim my daughter (since this didn't help me at all)?

Any suggestions would be great.

Thanks!

Not A Product Question

Hal_Al

Employee

Only the person who claims the student as a dependent can claim the tuition credit, regardless of who paid the tuition.

But that is not true for a 529 plan distribution. If the mom got a 1099-Q for a 529 distribution, she can count some of the student's expenses (including all the room and board) to make the distribution not taxable or less taxable. If the distribution is fully covered by expenses, she does not need to report the 1099-Q.

Q. Plugging in the 1098-T said it didn't help my taxes at all. Is there anything I'm mandated to do?

A. The usual reason for not qualifying for the tuition credit is that your income is too high (>$90K Single or HOH). The 2nd reason is scholarship was too much (but there's a workaround for that). If that's not it, you entered something wrong.

You will need to do some coordinating with the mom and maybe the student in allocating the expenses for the best tax benefit. If you're not eligible for the tuition credit, consider letting the mom claim the student as a dependent this year. The credit is worth as much as $2500 to her (plus the [up to] $500 dependent credit) vs the $500 dependent credit you give up.