I have paid my granddaughers tuition, books and gave her spending money for college. Can I deduct any of this

Question

Her parents claim her as a dependent on their tax return. I either paid the college direct or gave her the money to put in her account to pay the college. I also bought her books and gave her spending money. Can I deduct any of this on my tax return? Please advise any publications or instructions that would help me. Thanks

Answer 1

Generally, you can claim the tuition and fees deduction if all three of the following requirements are met.

You pay qualified education expenses of higher education.

You pay the education expenses for an eligible student.

The eligible student is yourself, your spouse, or a dependent for whom you claim an exemption on your tax return.

Publication 970
http://www.irs.gov/publications/p970/ch06.html#d0e6369

Answer 2

You may be able to deduct qualified tuition and related expenses that you pay for yourself, your spouse, or a dependent.

Expenses paid by others.
Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student's qualified education expenses. In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. If you claim, or can claim, an exemption on your tax return for the student, you are not considered to have paid the expenses and you cannot deduct them. If the student is not a dependent, only the student can deduct payments made directly to the institution for his or her expenses. If the student is your dependent, no one can deduct the payments.

Example.

In 2005, Ms. Baker makes a payment directly to an eligible educational institution for her grandson Dan's qualified education expenses. For purposes of deducting tuition and fees, Dan is treated as receiving the money as a gift from his grandmother and, in turn, paying his own qualified education expenses.

If an exemption cannot be claimed for Dan on anyone else's tax return, only Dan can claim a tuition and fees deduction for his grandmother's payment. If someone else can claim an exemption for Dan, no one will be allowed a deduction for Ms. Baker's payment.

Answer 3

Since you cannot claim her as a dependent you cannot claim anything on her tuition. Contributions for spending money are never deductible.

Depending upon the amounts of money involved, there may be Gift Tax consequences. You get an annual exemption of $12,000 and if you give more than that you may have to pay Gift Taxes on the excess.