Author Topic: Is their any tax deduction/credit for post secondary education?  (Read 326 times)

BTDretire

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I previously received a credit for my kids college tuition.
Now my daughter is going to Dental school and I can no longer
get any credit/deduction for her, she is 26 yrs old.

 Is there any credit/deduction if she pays the tuition fees?

My wife and I could at least gift her and her husband up to $56k
which will almost pay the tuition.
 That way, if their is a deduction/credit for tuition, they could use it.

MDM

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BTDretire

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Re: Is their any tax deduction/credit for post secondary education?
« Reply #2 on: June 27, 2018, 03:24:54 PM »
Ok, it looks like she could get the LLC and/or the Tuition and Fees Deduction.
It says  "No Double Benefit Allowed" but it's not clear to me that if you use up the
LLC and still have expenses that have not been used, you can't use the Tuition and Fees Deduction for those.
Can you clarify?
 My daughter is going to Dental school with a $65k yearly tuition so there will be plenty of expenses.
My idea, is to gift her and her husband money and then, they can pay the tuition with their money and get the tax breaks.
Does that sound proper? 

MDM

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Re: Is their any tax deduction/credit for post secondary education?
« Reply #3 on: June 27, 2018, 04:02:50 PM »
Ok, it looks like she could get the LLC and/or the Tuition and Fees Deduction.
It says  "No Double Benefit Allowed" but it's not clear to me that if you use up the
LLC and still have expenses that have not been used, you can't use the Tuition and Fees Deduction for those.
Can you clarify?
"You cannot take both an education credit from Form 8863 and the tuition and fees deduction from this form for the same student for the same tax year" on https://www.irs.gov/pub/irs-pdf/f8917.pdf, unfortunately, seems clear.

Quote
My daughter is going to Dental school with a $65k yearly tuition so there will be plenty of expenses.
My idea, is to gift her and her husband money and then, they can pay the tuition with their money and get the tax breaks.
Does that sound proper?
Yes.  She is clearly not your dependent, and gift recipients may do what they please with the gift.

BTDretire

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Re: Is their any tax deduction/credit for post secondary education?
« Reply #4 on: June 29, 2018, 05:49:51 AM »
My kids came to visit this weekend, at the same time my daughter emailed two dental school bills.
I think she wanted to be present when I got the bill. In case I needed medical help? :-)
 The two bills total $38,400. $28,400 tuition and $9,400 for dental tools.
Is there a proper way to gift the money to her and her husband.
Can I just wire transfer money into their joint account?
Do I need to specifically identify the separate $14,000 allotments?
 Any specific records I need to keep?
                                   Thanks

FIPurpose

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Re: Is their any tax deduction/credit for post secondary education?
« Reply #5 on: June 29, 2018, 05:56:31 AM »
Well gifting isn't something that you claim on your taxes. And there is a cap to the tuition deduction. So they still need to have taxable income to claim the deduction which maxes out at $4000. So not nothing, but they're also not going to be able to deduct some $40k either.

There's also a lifetime limit to how much you can gift someone. So as long as they don't get audited and it's not egregious, you should be fine.
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CareCPA

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Re: Is their any tax deduction/credit for post secondary education?
« Reply #6 on: June 29, 2018, 06:12:59 AM »
My kids came to visit this weekend, at the same time my daughter emailed two dental school bills.
I think she wanted to be present when I got the bill. In case I needed medical help? :-)
 The two bills total $38,400. $28,400 tuition and $9,400 for dental tools.
Is there a proper way to gift the money to her and her husband.
Can I just wire transfer money into their joint account?
Do I need to specifically identify the separate $14,000 allotments?
 Any specific records I need to keep?
                                   Thanks
Nope, doesn't really matter how you send it or how you break it up.
Keep in mind, the $14k per person limit is for the year. So if you and your wife gift your daughter and her husband $56k, you would technically need to a file a gift tax return if you got them a Christmas/Holiday gift.
There's obviously no mechanism for tracking that, but just in case you transferred money again later in the year, you would want to be careful how you did it just in case it ever came up.
Always happy to help with tax or accounting questions - feel free to private message me or check out CareCPA.com

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

BTDretire

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Re: Is their any tax deduction/credit for post secondary education?
« Reply #7 on: June 29, 2018, 06:33:41 AM »
My kids came to visit this weekend, at the same time my daughter emailed two dental school bills.
I think she wanted to be present when I got the bill. In case I needed medical help? :-)
 The two bills total $38,400. $28,400 tuition and $9,400 for dental tools.
Is there a proper way to gift the money to her and her husband.
Can I just wire transfer money into their joint account?
Do I need to specifically identify the separate $14,000 allotments?
 Any specific records I need to keep?
                                   Thanks
Nope, doesn't really matter how you send it or how you break it up.
Keep in mind, the $14k per person limit is for the year. So if you and your wife gift your daughter and her husband $56k, you would technically need to a file a gift tax return if you got them a Christmas/Holiday gift.
There's obviously no mechanism for tracking that, but just in case you transferred money again later in the year, you would want to be careful how you did it just in case it ever came up.

Then, is it still a gift to them, if I pay any additional tuition over the $56k directly to the school?

 Also, I'm gifting so they can use the tax deduction, can they carry forward any of the tuition expenses?
I don't think their income is high enough to use all the credit.

CareCPA

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Re: Is their any tax deduction/credit for post secondary education?
« Reply #8 on: June 29, 2018, 06:42:20 AM »
My kids came to visit this weekend, at the same time my daughter emailed two dental school bills.
I think she wanted to be present when I got the bill. In case I needed medical help? :-)
 The two bills total $38,400. $28,400 tuition and $9,400 for dental tools.
Is there a proper way to gift the money to her and her husband.
Can I just wire transfer money into their joint account?
Do I need to specifically identify the separate $14,000 allotments?
 Any specific records I need to keep?
                                   Thanks
Nope, doesn't really matter how you send it or how you break it up.
Keep in mind, the $14k per person limit is for the year. So if you and your wife gift your daughter and her husband $56k, you would technically need to a file a gift tax return if you got them a Christmas/Holiday gift.
There's obviously no mechanism for tracking that, but just in case you transferred money again later in the year, you would want to be careful how you did it just in case it ever came up.

Then, is it still a gift to them, if I pay any additional tuition over the $56k directly to the school?

 Also, I'm gifting so they can use the tax deduction, can they carry forward any of the tuition expenses?
I don't think their income is high enough to use all the credit.
If you pay directly to the school, my understanding is that it is not considered a gift to the student.
I'm also not aware of any capability to carry tuition expenses forward.
Always happy to help with tax or accounting questions - feel free to private message me or check out CareCPA.com

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

BTDretire

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Re: Is their any tax deduction/credit for post secondary education?
« Reply #9 on: June 29, 2018, 06:59:02 AM »
Thank you for the input.