Tax deduction helping a friend pay tuition

Question

I'm helping a friend pay for tuition. On my taxes, will I be able to make any deductions or get any money back when I file my taxes? This is in the US.

Answer 1

I'm guessing you're asking about the US. Please add a location tag to your question.

Unfortunately you cannot claim expenses paid for someone other than yourself or your dependents. In IRS publication 970, that deals with education credits, they give the following guidance:

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.

Also, you should keep the gift tax in mind: your help to your friend is only exempt from gift tax if you pay the tuition directly (i.e.: you write the check to the school cashier, not to your friend). If you give the money to your friend, it is subject to gift tax (which you have to pay).

In some cases, someone who is not family may in fact qualify to become your dependent. For that he must live with you (in the same household), and be supported by you and not have any significant income. If that's the case with you and your friend, you might be able to claim him as a dependent and get some significant tax benefits, including the education credits. Consult your tax adviser if its relevant to your situation.