Hi Everyone,

I recently moved to USA with my family. My son is currently a FT student and works part time jobs. During the year 2012, his total income was only $7000.

This year we got 1098T from his university and were wondering if we HAVE to claim the tuition and education credits when we file the tax returns this year (for 2012).

Isn't it possible to carry forward the deductible amount for future when he starts earning higher income and be able to claim it then ?

If its possible, is there any timeline to useup all the credits ?

Kindly let me know.

Thanks
Sean.

“This year we got 1098T from his university and were wondering if we HAVE to claim the tuition and education credits when we file the tax returns this year (for 2012). “============>It depends; the rules regarding who claims education credits usually favor the eligible student, unless the parent claims them as an exemption on their tax return. So,as long as you claim your child as your dependent, as a qualifying child, on your return, you can claim the education credit as your child is claimed as an exemption on your tax return.

“Isn't it possible to carry forward the deductible amount for future when he starts earning higher income and be able to claim it then ?”======>Unless he is your dependent then he can claim the edu credit on his return ;in the case of AOC,in general, credits apply to an existing tax liability and if the credit is greater than the tax liability, you either lose the remainder of the credit balance or you may carry it forward to subsequent tax years. In this case however, it’s refundable so even if you have no tax liability, you would still get money back;for 2012, If you make more than the top of the range: $90,000 (single or head of household) and $180,000 (married filing joint), you aren’t eligible for the credit and you cannot carry forward any unused credit to subsequent tax years. ALSOif a state says that a taxpayer may deduct up to $5,000 in Section 529 plan contributions in any one year, an $8,000 contribution would only be partially deductible. In theory, $3,000 of this contribution would miss out on favorable tax treatment.However, if the state offers a tax carryforward provision on Section 529 deductions, the $3,000 that was over the limit would be deductible in a later year, even if there were no further Section 529 contributions ever made.

If its possible, is there any timeline to useup all the credits ?=======>I gue indefinitely. You use these credits on your next income tax return if, and only if, the total of certain Non-refundable Tax Credits is less than your taxable income . Otherwise, the credits carry forward until you have need of them. Fortunately, the credits never expire. But they cannot be transferred to pay for education, nor can they be transferred to pay down your student loans.