**Who Can Claim a Dependent’s Expenses **</p>
<p>If there are qualified education expenses for your dependent during a tax year, either you or your dependent, but not both of you, can claim an American opportunity credit for your dependent’s expenses for that year.</p>
<p>For you to claim an American opportunity credit for your dependent’s expenses, you must also claim an exemption for your dependent. You do this by listing your dependent’s name and other required information on Form 1040 (or Form 1040A), line 6c.</p>
<p>IF you… claim an exemption on your tax return for a dependent who is an eligible student
THEN only… you can claim the American opportunity credit based on that dependent’s expenses. The dependent cannot claim the credit.</p>
<p>IF you…do not claim an exemption on your tax return for a dependent who is an eligible student (even if entitled to the exemption)
THEN only… the dependent can claim the American opportunity credit. You cannot claim the credit based on this dependent’s expenses.</p>
<p>Expenses paid by dependent. If you claim an exemption on your tax return for an eligible student who is your dependent, treat any expenses paid (or deemed paid) by your dependent as if you had paid them. Include these expenses when figuring the amount of your American opportunity credit. </p>
<p>Qualified education expenses paid directly to an eligible educational institution for your dependent under a court-approved divorce decree are treated as paid by your dependent.</p>
<p>Expenses paid by you. If you claim an exemption for a dependent who is an eligible student, only you can include any expenses you paid when figuring the amount of the American opportunity credit. If neither you nor anyone else claims an exemption for the dependent, only the dependent can include any expenses you paid when figuring the American opportunity credit.</p>
<p>Expenses paid by others. Someone other than you, your spouse, or your dependent (such as a relative or former spouse) may make a payment directly to an eligible educational institution to pay for an eligible student’s qualified education expenses. In this case, the student is treated as receiving the payment from the other person and, in turn, paying the institution. If you claim an exemption on your tax return for the student, you are considered to have paid the expenses.</p>
<p>**Example. **</p>
<p>In 2011, Ms. Allen makes a payment directly to an eligible educational institution for her grandson Todd’s qualified education expenses. For purposes of claiming an American opportunity credit, Todd is treated as receiving the money from his grandmother and, in turn, paying his qualified education expenses himself.</p>
<p>Unless an exemption for Todd is claimed on someone else’s 2011 tax return, only Todd can use the payment to claim an American opportunity credit.</p>
<p>If anyone, such as Todd’s parents, claims an exemption for Todd on his or her 2011 tax return, whoever claims the exemption may be able to use the expenses to claim an American opportunity credit. If anyone else claims an exemption for Todd, Todd cannot claim an American opportunity credit.