Q. In order to claim Lifetime Learning Credit (LLC) in 2025, I need to delay paying graduation year college tuition to Jan 1 2025 instead of Dec 30 2024 to get additional 1098-T. Is this possible?
A. Yes.
There's a chance the school my still include the billed tuition on the 2024 1098-T and not issue a 1098-T for 2025. But, that will not prevent you from claiming the LLC on your 2025 taxes. You meet the exception rule for not having a 1098-T.
What may prevent you from claiming the LLC is if your daughter is no longer your dependent for 2025. In that case, she will claim the LLC, even if you were the one who paid the tuition. That is allowed.
Can the student be claimed as a dependent in the Graduation year? (answer written as if the parent asked the question)
If he/she was a student (under 24) for at least 5 months and lived with you for more than half the year, and did not provide more than 1/2 his own support for the whole year, you can still claim him. Be sure he knows you're claiming him, so he doesn't claim himself. He can only be claimed once. But, he can "file taxes" without claiming his own exemption.
The real question is who should be claiming him in this "transition" year to adulthood. You two have to agree on who is going to claim his exemption. Each should do their taxes both ways and see which way the family comes out best. Even then, you have to meet the rules.
There are two types of dependents, "Qualifying Children"(QC) and Other ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test. Only a QC qualifies a taxpayer for the Earned Income Credit.
The rule is that a child of a taxpayer can still be a “Qualifying Child” dependent, regardless of his income, if:
- he is a full-time student under 24 for at least 5 calendar months of the year (graduating in May usually means you meet the 5 month rule)
- he did not provide more than 1/2 his own support (scholarships are considered 3rd party support and not support provided by the student).
- lived with the parent (including time away at school) for more than half the year
So, it usually hinges on "Did he provide more than 1/2 his own support in 2025.
The support value of the home you provided is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants. IRS Publication 501 on page 20 has a worksheet that can be used to help with the support calculation. See: http://www.irs.gov/pub/irs-pdf/p501.pdf (page 15)
