Remember years ago when there were no tax breaks for tuition and other college expenses? Today the education arena is one of the most complicated due to the credits, exclusions and deductions that are available. While a doctorate in taxation is not required, it might be useful in understanding some of the recent tax law changes.
As an example, who is entitled to the Hope scholarship credit? It seems to depend more on the relationship of the stars to the moon than who paid the tuition. If the student pays the tuition but is claimed as a dependent on the parent’s return, the parents claim the credit. If the grandparents pay the tuition, then it is considered paid by the student, unless of course it related to a dependent, then it is in turn considered paid by the taxpayer on whose return the dependent is claimed. On the other hand, if the parent pays the tuition but chooses not to claim the student as a dependent, then the student can claim the credit.
Of additional concern to us is Internal Revenue Code Section 6013. A nonresident alien may elect a Hope credit only if he elects to be treated as a resident alien. This appears to be another example of tax law which discriminates against potential visitors from outer space. We should be doing everything we can to increase our tax base and placing such a condition on this credit does not help.
If you are a student, parent, grandparent, or an alien and you think we can be of some help, please give one of our professionals a call.