When a child attends a post-secondary institution (e.g., college or university), there are tax benefits available to help cover tuition, textbooks, and other educational expenses. These tax benefits can reduce the financial burden for the parents or the student. Deciding who will claim these benefits—whether the parent or the child—is important and should be settled during mediation to avoid confusion or disputes.

1. Named

In the Named option, one parent is designated to claim the tax benefits related to the child’s post-secondary education. This can include credits for tuition, education-related expenses, and possibly other deductions tied to the student’s educational costs. The Named parent is the sole claimant of these benefits.

How It Works:

• One parent is named in the agreement as the person who will claim all post-secondary education tax benefits for the child.
• This parent claims the tax credits for tuition and other eligible expenses on their tax return, receiving any deductions or credits available.

Why Choose Named:

• Simplifies the Process: By naming one parent to claim the tax benefits, the process becomes clear and straightforward, avoiding disputes over who will claim which benefits.
• Maximizes Benefits: The Named option ensures that the tax benefits are fully claimed by one parent, which can be particularly useful if that parent is in a higher tax bracket and can benefit more from the deductions.

Considerations:

• It’s important to agree on which parent will claim the benefits, especially if one parent contributes more toward the child’s education costs.
• The named parent should ideally be the one who will benefit the most from the deductions, based on their tax situation.

2. Shared

With the Shared option, both parents share the tax benefits related to the child’s post-secondary education. This arrangement divides the benefits between both parents, usually in proportion to how much each contributes to the child’s education expenses.

How It Works:

• Both parents share the available tax benefits for tuition and other eligible post-secondary expenses, typically based on their financial contributions or a pre-agreed percentage.
• Each parent claims a portion of the tax benefits on their respective tax returns.

Why Choose Shared:

• Fair Distribution: Sharing the tax benefits allows both parents to benefit from the deductions, reflecting their shared responsibility for the child’s educational expenses.
• Flexibility: This option is useful when both parents contribute to tuition and other education-related costs, ensuring that the benefits are split in a fair and agreed-upon manner.

Considerations:

• Parents must agree on how to divide the tax benefits, whether equally or based on their respective contributions to the child’s education.
• This option may require more coordination between both parents to ensure that they don’t accidentally claim the same benefit, leading to issues with their tax filings.

3. Not Applicable (NA)

The Not Applicable option means that no parent will claim the tax benefits for the child’s post-secondary education. This may be the case if the child is financially independent and claims the tax benefits for themselves or if the parents agree that neither will claim the benefits.

How It Works:

• Neither parent claims the tax benefits for the child’s post-secondary education. Instead, the student may claim the credits on their own tax return if they have enough income to benefit from them.
• Alternatively, the parents may agree that no tax benefits are claimed due to their specific financial or tax situation.

Why Choose Not Applicable:

• Student Independence: If the child is financially independent or has a sufficient income, it may be better for them to claim the tax benefits directly.
• Simplifies Filing: If the parents agree that they will not claim the credits, this simplifies tax filing and avoids any disputes over who is entitled to the benefits.

Considerations:

• If the child’s income is low, they may not fully benefit from claiming the tax credits themselves. In this case, it might be more beneficial for one or both parents to claim the credits.
• Parents should carefully evaluate whether leaving the benefits unclaimed is the best financial decision.

Comparison of Post-Secondary Tax Benefit Options

Conclusion

Choosing how to claim the Tax Benefit for Post-Secondary Education is an important decision that can significantly impact both parents’ financial situation. The Named option simplifies the process by allowing one parent to claim all the benefits, while the Shared option fairly distributes the credits between both parents. The Not Applicable option might be suitable if the child is financially independent and claims the tax benefits themselves. Deciding on the best option in mediation ensures that both parents are clear on how to handle these tax benefits, avoiding disputes and maximizing financial savings.