You qualify for the tuition and fees deduction if you pay qualified education expenses, as described above, for the higher education of an eligible student. An eligible student, for this purpose, can be you, your spouse, or a dependent for whom you can claim an exemption on your tax return.
Who Can Actually Claim the Deduction if the Student is Your Dependent?
In general, if the student is your dependent, you can claim the tuition and fees deduction if you pay the qualifying education expenses and you actually claim an exemption for your dependent on your tax return.
There are some specific rules that apply as to who can actually claim the deduction, depending on who paid for the expenses. These rules may be important to keep in mind when deciding who actually pays for the education expenses.
If you actually claim an exemption for your dependent, but your dependent pays all the qualifying education expenses, no one can claim the tuition and fees deduction.
If you do not claim an exemption for your dependent, even though you are eligible to, and either you or your dependent pays all the expenses, no one can claim the deduction.
If neither you nor anyone else is eligible to claim an exemption for your dependent, and you paid the expenses, only your dependent can deduct the expenses. Your payment is treated as a gift to your dependent for tax purposes.
If you are not eligible to claim an exemption for your dependent, and your dependent paid the expenses, only your dependent can claim a deduction.
While the tuition and fees deduction is only one aspect involved in deciding whether to claim your dependent as an exemption, the effect of this deduction on each of your tax situations should be taken into account.
Payments Made Under a Divorce Decree
Expense paid directly to an eligible educational institution on the student’s behalf, under a court-approved divorce decree, can be deducted only by the student, and then only if no one else is eligible to claim an exemption for the student.
Payments Made by a Third Party
If someone else, for example a relative of the student, makes a payment directly to the educational institution on the student’s behalf, the payment is treated as having been received by the student and then paid by the student to the educational institution. In this case, only the student can deduct the expenses, provided he or she is not your dependent or a dependent of anyone else. If the student is your dependent, or anyone else’s dependent, no one can claim the deduction.