Tuition credit or deduction?

[cronewitch]

My great nephew is in college but set up a friend account so I could pay into his tuition account. I put in 10K to help him with college do I get any benefits tax wise? It was just in his account for tuition and books as a gift for starting college. Can he deduct tuition he paid with the money I deposited or money he paid from his savings or earnings?

[mwcpa]

Who is entitled to claim your nephew as a dependent?

if they claimed some credit /deduction, assuming they are entitled to it, then your nephew cannot.

[haapai]

Probably not.  He's not a dependent or a close enough relative. 

However, if you choose to do this again, someone might get a tax benefit if the right hoops have been set up ahead of time and obediently jumped through. 

How old is your nephew?  Is gifting the money to his parents and then having them gift it to him an option? 

Crone, you're a retired CPA.  You've got the time on your hands to figure this out.  No matter how tired you are of reading tax publications, you've still got the whatsis for reading tiresome stuff and figuring out how to make it work for you. 

But since the FAFSA is probably new to you, here's a link to finaid that will be helpful in determining how your gifts may or may not affect his aid. 

Happy slogging!

[taxref]

The answer given by MWCPA is correct.  Any tax benefits for education go to the person who *can and does* claim the student as a dependent.  It does not matter if the funds actually were given by a third party.

In this case, that would mean:

1. If the student's parents can and do claim him as a dependent, the parents get the tax benefits.
2. If the student's parents cannot claim him as a dependent, the student gets the tax benefits.
3. If the student's parents can claim him as a dependent, but choose not to, no one benefits.
4. In any of those scenarios, the third party cannot benefit.