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Posted by Helpful One on January 18, 2007, 4:20 am
Please log in for more thread options > Dennis wrote:
>> Years ago, I co-signed for a P.L.A.T.O. GRE loan for my son.
>> For reasons unimportant to the questions, he was forced to
>> file bankruptcy in late 2005, a few months after payments on
>> the loan were started. Even though the loan was not part of
>> the bankruptcy, shortly after it was discharged, I got a
>> letter from Wells Fargo informing me that the loan had
>> reverted to me *because* of his bankruptcy. Being the nice
>> dad that I am <G>, I had actually started paying it about
>> that time anyhow as my last gift to him regarding his
>> education.
>>
>> Saturday, I got the annual interest statement on the loan,
>> and to my surprise, they note that it was reported to the
>> IRS under my name and SSN. Even though I had been paying it
>> in the past (2005 tax year), I let him take the interest
>> deduction on his return, but I don't see how we can do that
>> this year since they reported it under my name/SSN.
>>
>> We're only talking about a little over a hundred bucks back,
>> no matter which of us claims it. It's just that I don't
>> know how nit-picky the IRS is on such matters.
>>
>> The questions:
>>
>> Can he claim it if I elect not to?
>>
>> Is it legitimate for me to claim it under any circumstances,
>> or do I *have to* because it's reported in my name?
>>
>> Should we get Wells Fargo to send an amended statement
>> showing his name and SSN?
> Is your son your dependent?
>
> If not, you don't qualify to claim the deduction. Payments
> you have made are considered gifts to him, with the payments
> credited to him. If he is your dependent, you are legally
> obligated to make the payments, and actually do make the
> payments then you can claim the deduction.
Although, this doesn't address the OP's original question,
it does focus on the above response he received.
It would seem to me that if:
1) you were a co-signer for the loan, and
2) the loan has reverted to you, and
3) you are making the payments on the loan
then:
1) Your loan payments are being made to the lender in
fulfillment of your obligation, and
2) Are not a gift to your son and therefore, to the
extent that the loan qualifies for deduction, you
may deduct it whether your son is your dependent or
not.
However, if you want to let your son claim the deduction,
then
1) The loan payments become a gift to your son, and
2) you probably need to get an answer to your original
post,which I'll leave to the experts to do.
I might also suggest that if the value of the deduction is
only "a little over a hundred dollars not matter which of
you claims it", why don't you claim the deduction and then
gift your son the amount you will save in taxes.
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