College Tax Breaks

[Counterfeit]

How do these work?

I'm a first year student and apparently was unable to file them under my name so it went to my parents. Is there a common average people usually get back from these so that I know my parents are not only giving me half of what I should be receiving or something?

[Teorem]

College-related tax credit for undergraduates varies with adjusted gross income of your parent(s) and your enrollment status. This year, for a half-time or more student, the main one--the American Opportunity Credit--is $2500 for AGIs up to $160k (for a couple filing jointly).

However, if you mean that you're unable to file an independent return because you are either A) under 18/not otherwise legally emancipated, or B) your parent(s) provide more than 50% of your financial support, your parents shouldn't be morally entitled to give you a cent of that credit, especially if they are meeting their EFC for your education. They're not getting a credit because you decided to go to college, they're getting it because they're supporting you while you go to college.

http://www.irs.gov/newsroom/article/...213044,00.html

[Dolmen]

The American Opportunity Credit will only work for tax years 2009 and 2010, and it applies to the four years of an undergraduate education program. It replaced the Hope Credit which only covered the first two years, with the Lifetime Learning Credit covering tuition expenses you incur: like a working adult taking random classes for leisure, work, etc..., or Junior & Senior years of college. There's also a tuition expense deduction which normally works out better as you make more money seeing as there is an income phase out on the credits.

The American Opportunity Credit is a credit for 100% of the first $2,000 of expenses, and 25% of the next $2,000. This allows a maximum credit of $2,500 on your tax return. The unique thing about the AOC is that it also covers the cost of books, which the others do not. To give you an example, I spent $2100 on tuition, and $650 on books this year for a combined $2,750 of education expenses. I received a credit for 100% of $2,000 of that, and 25% of the remaining $750, so $187.50, for a combined $2,188 credit on my tax return (IRS prefers rounding). Basically, in addition to my refund based on my AGI, that $2,188 was added to my refund. It was in essence like taking the 6 classes I did + books cost me $564.

If you have no income, or didn't pay any tax, you're not going to be able to take it, so let your parents claim you and take it. If you're taking student loans in your name, but your parents are supporting you, you should get maybe half. If your parents are paying for college/taking the loans, you should get nothing.

tl;dr - American Opportunity Credit = good. If you're not paying for your education, don't be greedy.. let your parents have the cash.