Why does my son get a T2202 tax credit when I paid the student fees

[vincej]

I Just don't get it. I paid out nearly $7000 for his university and HE is getting a T2202 tax credit. How can this be? What is worse, when he applies the T2202 it DECREASES his tax rebate. And now he wants me to refund him the lost rebate!! What is going on?? Has he done something wrong???? Is he obligated to enter the T2202?? How can I have the tax credit?? 

Many Thanks! 

[TurboTaxSusan]

The tuition tax credit is offered by the Federal government as well as some provinces specifically to the student, regardless of who actually pays for the tuition. But, if the student doesn't use all the tuition, then they may be able to transfer part if it to a spouse, parent or other family member.

As to why his refund went down - what likely happened is that when he put in his income, TurboTax claimed the Canada Workers Benefit (CWB) (aka the Working Income Tax Benefit) for him. This is a refundable tax credit for people who work, but don’t make very much. However, students are usually not eligible for this credit, so tuition was added, the CWB was removed, lowering the refund. Other credits might be affected as well, as the tuition credit must be used before other credits, like the dividend credit.

If your son doesn't enter his T2202 on his return, he will not be able to transfer or carryforward his tuition. He may also have difficulties with the CRA if he takes credits the CWB when he is not eligible for it.

[vincej]

HI !  
Many thanks for your reply!  Can you please help me understand why the CRA gives a credit to the student when it is the Dad ( me! ) who pays the University costs? Seems backwards to me. 

Many Thanks!  Vince 

[TurboTaxGinette]

For the answer and clarification to this question you may wish to contact the Canada Revenue Agency (CRA) by calling them at 1-800-959-8281.

Thank you for choosing TurboTax.

[vincej]

Many Thanks! One additional Question: Is it possible for my son to claim for example, $100 on his T2202 and transfer the balance to me? 

Many Thanks! 

[TurboTaxGinette · Accepted solution]

Unfortunately, it is required as per the Canada Revenue Agency (CRA) that all of the tuition fee required to bring his taxes to zero be used before the left over amount can be transferred to you as seen in this CRA link: Transfer the current year's amount

You (your son) may transfer a maximum of $5,000 of the current year’s federal tuition amount, and where available, the applicable maximum for provincial and territorial tuition, education and textbook amounts, minus the amount you used to reduce your tax owing as calculated on Schedule 11.

Thank you for choosing TurboTax.