Today TaxMama hears from Kevin in the TaxQuips Forum, with an interesting problem. “Many high school students are taking Advance Placement (AP) courses through an eligible educational institution as a means to earn college credits at an economical price. I was trying to find out if the costs of these courses are deductible as Tuition and Fees or some other way. Pub 970 defines an eligible student as ‘must have either a high school diploma or a GED credential’ so I’m not confident this is possible; but this is the best place to ask.”
Hmmm…that’s a very good question. First of all, the student cannot take the deduction, regardless. Only the parent may.
You cannot take the tuition and fees deduction on your income tax return if your filing status is married filing separately, or if you may be claimed as a dependent on someone else’s return.
Let’s see, there is no restriction about completing high school or a GED for the American Opportunity Credit (AOC). See who cannot claim the credit. Although, if only one or two classes are being taken, that might be a waste of the credit.
There is no restriction for the Lifetime Learning Credit and you can use this year after year. (It has the same exceptions as the AOC.)
Interesting, ONLY the tuition and fees deduction has that restriction. I doubt an auditor would catch that, if you were audited. But that does make it permissible.
The one thing you might consider doing is – have the student take the GED. I am sure that AP student could pass it blindfolded with one hand tied behind his/her back. And then….voila! They qualify for the Tuition and Fees deduction.
Of course, you’re probably better off with the Lifetime Credit. That directly reduces your taxes, rather than your taxable income.
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