When you reach the milestone of sending one of your children off to college, everything changes. All of the work it took to get to this point can leave you filled with pride. It can also leave you wondering what this means for your taxes. You now have scholarships, grants, loan deductions and more that you need to worry about. Mark Dicus & Company is here to answer some of the questions you may have surrounding your college child and what you can and can’t claim on your taxes.
Can I Claim My Child as a Dependent if They are in College?
If you have a child that is enrolled in college full-time, you can claim them as a dependent until they turn 24. However, there is a catch. You have to be supporting more than half of their finances for this to be the case. If they make more than 12,500 in a year or have unearned income from capital gains, dividends or interest that exceeds $1,100, they usually will be required to file their own return. You can still claim them as a dependent even if they have filed their own return though.
Who Qualifies for Education Credits
There are possible education credits if you are claiming your college student as a dependent. For instance, there is a Lifetime Learning Credit or the American Opportunity Credit that you could possibly take advantage of. Just be aware that there are income limits that are in place with these types of credits. If your household exceeds that threshold limit, your child could still qualify for these credits if you aren’t claiming them as a dependent.
Education Related Tax Forms
Anyone that has paid for college tuition to a college or university should receive a Form 1098-T from the IRS. This will show how much money you paid in tuition and what education credits you may be eligible for. If you have student loans, you may get a Form 10998-E from the lender that may have information on it about interest you have paid and can deduct from your taxes.
How Much Taxes Do You Pay on Scholarships?
You may be wondering if you have to pay taxes on your child’s scholarships as well. Some scholarships are tax-free. However, there are some that aren’t. Usually, you have to use every last penny on tuition or qualified education expenses for the money to be tax free as well. If you can’t find any solid information on whether or not your scholarship is tax free, it is best to meet with a tax professional to have those questions answered.
Tax Preparation, Filing & More in Summerlin, North LV, Henderson, Lone Mountain Village & Greater Las Vegas, Nevada
If you are worried about what your college student expenses are going to do to your taxes or are wondering if you can still claim them as a dependent, you can turn to Mark Dicus & Company for the answers you need. We will help you prepare your taxes to get the maximum return. Call us today!