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The interest expense on qualified education loans is deductible if the taxpayer meets the income limitations

Relationship. Naturally, a taxpayer’s own children meet this test, but a child’s descendant or a brother or sister or descendant of a brother or sister can also meet the definition of a qualifying child for the purpose of claiming a dependency exemption (Sec. 152(c)(2)).

Residence. A qualifying child must have the same residence as the taxpayer for more than half of the year; however, a student living away from home while in college is considered to be living in the same residence as the parents (Regs. Sec. 1.152-1).

Age. A qualifying child must be under age 19 or be a full-time student under age 24. For purposes of this test, a student must be enrolled in an educational organization, in what the college or university considers full-time attendance, during part or all of each of any five months in a calendar year (Sec. 152(f)(2)). Meeting this requirement can be difficult if the student does not sign up for a full load of classes or withdraws from some classes. Full-time attendance is defined by most universities as at least 12 semester hours. (más…)