It’s easy to misunderstand the tax implications when a youngster begins college.  Some key ideas:

Dependency to Parent. Unless the youngster is self-supporting, the personal exemption is claimed by the parent(s).  For separated parents we look at “custody” — where does the youngster expect to return?

Temporary Absence. Even while living away from home, a youngster’s “domicile” is probably with parent(s).  This is true unless the student never intents to return.

Tax Benefits With Dependency. Tax law is a little strange here.  The valuable education credits may only be taken on the return where the personal exemption (dependency) is claimed.   It doesn’t matter where the money  Read More→