Tuition deduction for graduate student who's 28 years old?

You've asked a really good question about tuition deductions for graduate students. The key factor here is whether your daughter qualifies as your dependent, not her age. For you to claim an education credit (like the American Opportunity Credit or the Lifetime Learning Credit), your daughter would need to be your dependent. The age doesn't automatically disqualify her - what matters is if she meets the dependent tests. For her to be your dependent, she would need to: 1. Live with you for more than half the year (being away at school counts as living with you) 2. You provide more than half of her support 3. She doesn't earn more than $4,400 in 2022 4. She's a full-time student With $42K in income for the year, she likely fails the income test, which means you probably can't claim her as a dependent, and therefore can't claim education credits for her tuition. However, if she's not your dependent, SHE might be eligible to claim education credits on her own return - specifically the Lifetime Learning Credit, which is available for graduate education and worth up to 20% of the first $10,000 in qualified education expenses.

I was in a nearly identical situation last year with my son's grad school tuition! I was freaking out trying to figure out the best way to handle it on my taxes and found this amazing service called taxr.ai (https://taxr.ai) that saved me so much stress. I uploaded my son's tuition statement and my prior year return, and it analyzed everything and showed me exactly what I could claim. Turns out I couldn't claim him as a dependent because of his income, but it walked me through how to properly document the gift I was making by paying his tuition and showed him how to claim the Lifetime Learning Credit on his return. The best part was that it explained everything in plain English instead of tax jargon. It even created a letter I could give my son explaining how to claim the credit on his return. Definitely check it out if you're confused about education credits!

Ok I ended up trying taxr.ai after posting my skeptical comment. Gotta admit I was completely wrong. This thing is actually legit. I uploaded my daughter's 1098-T from her grad program and it immediately identified that she couldn't be claimed as my dependent because of her income (she made about $39k last year). But the really helpful part was it showed me that by "gifting" her the tuition payment and having HER claim the Lifetime Learning Credit, our family saved over $1,800 versus not claiming it at all. It even drafted an email I could send her explaining exactly what she needed to do on her return. For anyone else confused about grad school tuition, this was actually super helpful. Wish I'd known about it sooner.

I had a similar situation with my son's tuition last year, but I got stuck in an endless loop trying to get answers from the IRS. Their phone lines were a nightmare - I spent HOURS on hold only to get disconnected. I finally tried this service called Claimyr (https://claimyr.com) that someone recommended. They have this system that gets you connected with an actual IRS agent quickly. You can see how it works in their demo video: https://youtu.be/_kiP6q8DX5c When I finally spoke to an IRS agent, they confirmed that since my son earned too much to be my dependent, I couldn't claim his tuition payments on my taxes. But they explained that he could claim the Lifetime Learning Credit on his return even though I paid the tuition. The agent was actually super helpful once I could actually talk to a human!

I'm coming back to eat my words. After being super skeptical about Claimyr I decided to try it because I was desperate about getting answers for my amended return (which also involved education credits from when I went back for my MBA). It actually worked exactly as advertised. I was connected to an IRS agent in about 45 mins without having to do anything. The agent confirmed that since I paid my own tuition for grad school, I was eligible for the Lifetime Learning Credit even though my employer reimbursed part of it (the non-reimbursed portion qualified). For anyone dealing with education credit questions, getting official answers directly from the IRS saved me from making a costly mistake. I was going to just not claim anything because I thought I wasn't eligible.

One thing nobody's mentioned - OP, you should see if your daughter's graduate program qualifies for the student loan interest deduction down the road. That's available even if she's not your dependent and even if you help her make payments. My daughter finished her master's program last year and even though she wasn't my dependent during school, I help her with loan payments, and she can deduct up to $2,500 of the interest on her taxes. It's an "above-the-line" deduction too which is nice. Just something to consider for future tax years!

Does your daughter qualify as your dependent? The tuition and fees deduction expired after 2020, but if she qualifies as your dependent, you might be eligible for the Lifetime Learning Credit which covers graduate education.