From:  Anonymous
Date:  Sat, 4 Sep 2010

My 19 year old son, a full-time college student, claimed a $2,500 American Opportunity Credit on his 2009 federal income tax return. No person claimed him as a dependent. The IRS disallowed the credit. They said if my son did not claim a personal exemption for himself, which is not allowed, then he does not get the credit. Is this correct?

Answer

Date:  15 Oct 2010

Hello,

According to Internal Revenue Code Section 25A(d)(2)(g)(3), “If a deduction under section 151 (personal exemption) with respect to an individual is allowed to another taxpayer for a taxable year … (A) no (American Opportunity) credit shall be allowed … to such individual for such individual’s taxable year, and (B) qualified tuition and related expenses paid by such individual during such individual’s taxable year shall be treated … as paid by such other taxpayer.”

The IRS appears to be taking the position that since your son isn’t entitled to the personal exemption deduction for himself, it is allowable to someone else, so he can’t claim it.

If you were entitled to the exemption deduction for your son and elected not to claim it so he would qualify for the credit, you could try fighting this determination. I doubt it’s worth the time, expense and hassle to go beyond writing a letter arguing the point.

Good luck!

Mike Gray

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