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If the AOC was never claimed when she was in undergraduate school, can she claim for grad school?

For 2020, not if she already completed 4 years of postsecondary education before the beginning of the tax year that she's claiming the credit for. This version of https://www.irs.gov/pub/irs-pdf/p970.pdf talks about completing 4 years of postsecondary education before the beginning of 2019, but it's the version for 2019 returns.

AJ
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For tax year 2020, my daughter was 24 years old and we will not claim her as a Dependent on our tax return. However she was still in school and we paid her tuition in 2020. Can she claim this tuition on her tax form even though we paid it?

It depends on whether she can be claimed as a dependent (even if you're not claiming her), if you paid the tuition directly to the school, and which particular benefit she is trying to claim.

You can see if she is eligible to be a dependent here https://www.irs.gov/help/ita/whom-may-i-claim-as-a-dependent...

You can see details about the different education benefits here https://www.irs.gov/pub/irs-pdf/p970.pdf

AJ
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Hi AJ:
I cannot claim her as a Dependent. I paid her tuition through her school account with my credit card. Publication 970 refers to "You pay education expenses". Since "You" refers to the person filing, it sounds like she cannot claim the education credits. Is this true? Could I consider the tuition payment as a gift to her and she paid the tuition, even though it was using my credit card?

Thank you, Ken.
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Could I consider the tuition payment as a gift to her and she paid the tuition, even though it was using my credit card?

Is that what you intended?
Like because she doesn't have a credit card that has sufficient limit to make the payment?
If so, I'd document that's what you are doing - like a simple email to your daughter "As a gift for your birthday, we are forgiving the debt that you owe us for using our card to pay your tuition. Happy early birthday! Love, Mom&Dad"
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Since "You" refers to the person filing, it sounds like she cannot claim the education credits. Is this true?

I would suggest digging farther in Pub 970. As I said, part of it depends on which benefit she's trying to claim, so she needs to figure out which one(s) she's eligible for. The American Opportunity Credit (AOC) is generally the most beneficial, but if it's already been claimed for her for 4 years, she's no longer eligible. So then, move onto the Lifetime Learning Credit (LLC), which she probably will be eligible for. Both of those credits allow a parent (or someone else) to make payments directly to the school and the student to claim the credit, as long as the student can't be claimed as a dependent. On the other hand, if she' trying to claim the tuition and fees deduction, she would have to be the one who paid the tuition.

Could I consider the tuition payment as a gift to her and she paid the tuition, even though it was using my credit card?

That's the way that the AOC and the LLC basically treat it, as long as you made the payment directly to the school. If all that she's eligible for is the tuition and fees deduction, then it's likely that nobody will be able to claim the deduction.

AJ
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AJ:
If the AOC was never claimed when she was in undergraduate school, can she claim for grad school?

Thank you for your help, Ken
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No. of Recommendations: 1
If the AOC was never claimed when she was in undergraduate school, can she claim for grad school?

For 2020, not if she already completed 4 years of postsecondary education before the beginning of the tax year that she's claiming the credit for. This version of https://www.irs.gov/pub/irs-pdf/p970.pdf talks about completing 4 years of postsecondary education before the beginning of 2019, but it's the version for 2019 returns.

AJ
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