Education Credits

[floriatax]

My husband and I have a question about our daughter’s 2025 tax return.

Due to our high household income, we are not eligible to claim our daughter’s education credits. Therefore, we have decided NOT to claim her as a dependent on our tax return. This way, she can file her own return and claim the education credits herself, even though we paid for her tuition.

Our daughter only earned $900 on her W-2 for the year. We are using TurboTax to prepare her return, and it is asking the following questions:

1. Can another taxpayer claim you as a dependent?
2. Did you support yourself in 2025?

Our goal is for her to successfully claim the Education Credits.

Could you please advise us on how she should answer these two questions to ensure she is eligible for the credits? Additionally, based on her income of $900 and the fact that we paid her tuition, approximately how much can she expect to receive in education credits?

Thank you for your help.

[AmyC]

The education credit rarely helps the student but the $500 for having a dependent can help the parents. Here is how to answer the questions:

1. Can another taxpayer claim you as a dependent?

Answer: YES. * Why: This is the question that trips most people up. Even though you are choosing not to claim her, the legal reality is that you could (since you likely provide more than half her support and she is under 24). Answering "No" would be factually incorrect in the eyes of the IRS.

The Follow-up: TurboTax will then ask, "Will this person claim you on their 2025 tax return?" She must answer NO. This is the "magic" combination that allows her to claim the credit herself.

2. Did you support yourself in 2025?

Answer: NO.

Why: Since she only earned $900 and you paid her tuition, she clearly did not provide more than 50% of her own financial support. Answering "Yes" could trigger an audit because her income doesn't match her expenses. 

If you say yes here, she does become eligible for the refundable credit  but only when she provides over half of her own support or over age 24.

The student has no tax liability with only $900 of income so the portion (60%) of the education credit that reduces tax liability will go unused.

The IRS is quick to audit the education credit at any sign of something off. Personally, I would not recommend you have the student take a credit when not qualified.