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<p>We allocated part of the grant from D’s school for non-qualified expenses in order to take the AOC. That part of the grant is taxable to D which puts her income over the standard deduction and she will pay taxes. I will pay her back as she is only paying taxes so that I can get the AOC. She’ll get a nice “refund” from us that she was owed with taxes withheld from her summer job.</p>
<p>cgpm59 – it sounds to me like you are fine, in the only “problem” is that you didn’t report all your qualifying expenses, but already got the full credit with the expenses you did report. I don’t think you need to change anything, and if you did it wouldn’t change your taxes due or refund amount.</p>
<p>how do you determine if a scholarship went to tuition and fees or if it went for room and board? If parents also paid money to the college. This is really a gray area when it comes to determining the aoc credit on your taxes. Do you always assume that the scholarship went for tuition and fees, instead of what the parents paid to the college? If our son reports the difference between the amount of his scholarship and tuition on his taxes- then could the parents assume the amount they paid went for tuition? I cannot find anything listed for his college that said the scholarship money was only for tuition. He is taking $5800 as a taxable amount on his taxes.</p>
<p>If the scholarship was not restricted (it didn’t say it was for tuition or for room and board explicitly) you get to decide what went to pay for what. You can figure out how to distribute the money to your best tax advantage.</p>
<p>If the parents want to assume what they paid went to tuition, then your son needs to declare both the difference between the scholarship and tuition, plus the amount you paid. </p>
<p>Example:</p>
<p>Scholarship 12K
Tuition 10K
Room and Board 5 K</p>
<p>Parents paid 3K</p>
<p>Scenario 1: Scholarship goes toward tuition first
Student claims 2K as taxable income, and parents do not get any tax credit</p>
<p>Scenario 2: Scholarship goes toward room and board first (5K to R&B, 7K to tuition)
Student claims 5K as taxable income
Parents claim AOC on the 3K they paid</p>
<p>You just need to figure out if the additional taxes to your student are more or less (usually less) than the tax credit for the parents. If the student taxes are less, take the credit and reimburse the student for the excess taxes.</p>
<p>Going back on the qualified educational expenses, what about tests, application fees, and transcript/documentation costs if they are required for the program and/or credit transfer? I’m in a BS/MA program where we were required to take the GRE or GMAT for admission into the latter and the other fees are related to summer classes I took at at another university and am using towards my degree requirements.</p>
<p>No, only tuition, mandatory fees to attend(not to get admitted), mandatory books and supplies. An orientation fee or a placement test fee would be included because they are required to attend. GRE or GMAT are required to be admitted.</p>
<p>Thank you for your help. :)</p>
<p>I am a 51 year old single parent with one child living at home. I started school in December 2011 at Grand Canyon University. I have been doing my own taxes for the last five years but I have no idea about this 1098T business. First is there a way to get this online since my school has not sent it yet, I have heard about ECSI but when I tried to get it there it said I was authenticated but then rejected me saying I have the wrong school code of Z3 (I got from off GCU Facebook page). Totally clueless about this. </p>
<p>My 2nd question is will this increase or decrease my refund. I usually qualify for unearned income and get back between 3500 to 4000 each year. Don’t know if this is going to help or hurt when I finally get to file. </p>
<p>My last question is I do my taxes online with TurboTax every year and have no problems. Their software always walks me through the process and since I only have one W2 and it is under 20k I use the 1040EZ. Will I still be able to trust this software now that I am a student and have more forms or should I go to a professional? I just hate paying that 300.00 I used to pay every year for such a simplified tax situation like I have had in the past. Any help would be so appreciated!!! Thanks and God Bless!</p>
<p>Most schools make the 1098T available online. IF GCU does you should get an email from them telling you how to access it. Not all schools will have the same procedure. There is still a week left before schools have to make it available. They may also mail it.</p>
<p>It only affects your taxes negatively if you received scholarships/grants that exceeded the cost of tuition, mandatory fees and required books and supplies.</p>
<p>Are you at least half-time in a program leading to a degree, certificate, or other
recognized educational credential for at least one academic period beginning during 2012? </p>
<p>If so, you may qualify for the AOC tax credit, part of which is refundable, i.e. like the earned income credit you can get back more than the tax you owe.</p>
<p>Here’s the IRS publication that explains educational matters:</p>
<p><a href=“http://www.irs.gov/pub/irs-pdf/p970.pdf[/url]”>http://www.irs.gov/pub/irs-pdf/p970.pdf</a></p>
<p>It’s still the 2011 one so you have to adjust the dates for 2012. If you are fairly familiar with how taxes work, TurboTax should be able to walk you through this.</p>
<p>The grant my child received is almost equal to tuition. The grant is not tuition specific. Can I apply 4000 of the grant to pay for room and board so I can receive the American Opportunity Credit?</p>
<p>^^^^ yes (10 char)</p>
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<p>Agree, I was getting antsy today so I called D2s school, they don’t make it available online and were in the process of sending them today. Give your school a call.</p>
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<p>Yes, but then the $4000 becomes taxable to your child. You would have to check if that plus any other income the child may have received in 2012 requires them to file a return and pay tax. Still, the AOC is almost certainly more valuable to you than any tax your child would have to pay.</p>
<p>scholarship funds that can only be used for tuition cannot be “converted” to taxable income to pay non-qualified expenses, so they cannot be used toward AOC. However 529 funds CAN be used toward AOC - you just have to treat them a bit differently than a regular 529 distribution.</p>
<p>If you are using $4000 worth of 529 funds, and you had scholarships, can treat the 529 as a taxable distribution, not subject to the penalty for non-qualified distribution.</p>
<p>See page 56 of the 2011 version of publication 970: <a href=“http://www.irs.gov/pub/irs-pdf/p970.pdf[/url]”>http://www.irs.gov/pub/irs-pdf/p970.pdf</a> under coordination with American Opportunity Credit</p>
<p>You don’t pay the 10% penalty, but you treat it as a taxable distribution - there is a special calculation to determine how much is taxable, based on the original account value, the account value at the time of distribution, and the amount of the distribution. If, due to the economy, you 529 account value is about the same as when you made the contributions, there wouldn’t be any tax to pay anyway.</p>
<p>ordinary lives, you may want to amend 2011, and read this part of pub 970 before you do this year’s taxes.</p>
<p>I’m hoping one of you numbers people can help me with this as I just can’t seem to wrap my head around it. Trying to get taxes done so I can get fafsa submited tonight. Oldest son received more in scholarship then tuition so he is going to convert $4000 of the scholarship to taxable income so I can claim the AOC. </p>
<p>Question is I’m using TurboTax and not sure where I should include the $4000 that son is counting as taxable income on my taxes. Should I adjust the numbers on 1098t, if so which one, or should I count the $4000 under other qualified expenses with books? Or some where else entirely?</p>
<p>If he received <em>more</em> in scholarships than tuition, he is going to have to pay tax on $4000 PLUS the amount of scholarship in excess of tuition (and other allowable expenses). And it doesn’t go on YOUR taxes anywhere. It goes on your son’s taxes on Line 1 (Wages, Salaries and Tips) and you put “SCH $4000” or however much it is on the line next to it as well. I don’t know off hand you you tell TurboTax to do this.</p>
<p>Don’t know TurboTax, I use TaxAct. Did TT ask you for the 1098T info on your return? Then TaxACT asks a question for QEE not on the 1098T. And one for scholarships not on the 1098T. Then TaxAct asks me for the amount of scholarships allocated to non QEE so that amount can be used for the AOC. TT doesn’t have a question like that?</p>
<p>Yes it does ask those questions. When I enter in the $4000 as QEE not on 1098t at the very end of the program while checking for errors the program kicks it out because the amount does not match the number on the 1098t? So it seems like I need to change the numbers on the 1098t to make it work but I’m not sure which box?</p>
<p>I don’t think you should change the 1098T numbers. Also you don’t want to count the $4K as QEE I don’t think since the reason it’s taxable is that it’s NOT for QEE. The 4K should be under scholarships not allocated to QEE.</p>
<p>OOHHHH…lol maybe thats the problem! So in order for me to get the AOC that son is paying taxes on I count it as scholarships not allocated to QEE? That would seem to work! </p>
<p>Sorry I’m truly not a numbers person and I am home alone with no help tonight! Thanks!</p>