What kind of tax break do parents get for paying their child's college tuition?

Question

Can the funds be put into their child's banking account or does it have to go directly to the college?

Answer 1

Everyone above is correct but here is some more info. The Hope credit is good for the first two years of school and is worth $1500 in tax credits...a direct reduction of your tax liability. If income is too high and the credit phases out you can take a limited deduction on page one of the form 1040 for tuition paid. After two year the lifetime learning credit is available at 20% of the first $10,000 in tuition or $2,000 per year maximum.
Here is the best part. The source of the money or which accounts you put it in are not important. Even if the student borrows the money and must pay the student loans back after graduation, the credit goes to the taxpayer who claims the student as a dependent. Even if the student has saved the money from years of mowing lawns, the credit goes to the taxpayer who claims the student as a dependent..that is usually mom and dad.

Answer 2

I'm not sure how funds work, but I believe your parents can still claim you on their taxes until you're 23 if you're a full-time (maybe part time too, I'm not sure) college student. This is so because usually parents are only allowed to claim their children on taxes until he/she is 18.

Answer 3

As I comprehend it, custodial make certain continually gets deduction till courtroom order specifies otherwise. Even then, courtroom in many cases demands custodial make certain to grant to different make certain the mandatory workplace work to take the deduction. The IRS won't enable him the deduction till you grant the workplace work. If the courtroom calls so you might grant the workplace work and you do no longer, they provide concept to that a controversy for the courtroom, no longer them. If non-custodial make certain meets the requirement, and you do no longer grant the type, the non-custodial make certain's basically recourse is to charge you with contempt of courtroom, and in case you nonetheless do no longer obey the courtroom and grant him the workplace work the courtroom can advantageous you or detention center you.--The IRS will nonetheless no longer enable him have it however--they choose the paper artwork. merely take the deduction on your earnings tax, and while the IRS sees the two one in all you doing it, an auditor would be assigned to the case, and type it out. via the way, the workplace work you sign isn't you giving permission for him to take the deduction, that's a assertion which you will no longer take it. that's a differrence to the IRS. I disagree with IVY, him taking the deduction won't be contempt of courtroom, on account that via the IRS rules, him wrongfully taking the deductions does no longer forestall you from rightfully taking them. He has no longer denied you something rightfully yours. of path, i'm no longer a criminal expert, seek for expert suggestion.

Answer 4

http://www.irs.gov/newsroom/article/0,,id=128874,00.html


Hope Credit and Lifetime Learning Credit are two popular education credits.

Usually the tax refund is credited to the parents tax return or the students if they are independent.

Answer 5

Joe and nikki are right, but beware of the income limits....