<p>Does the student who receives the 1098-T have to claim the amounts on the 1098-T or can it be shifted to the parents taxes?</p>
<p>Claim what you paid. Do not claim what the student paid, or what the student paid using the proceeds from a direct (or other) loan.</p>
<p>You asked this question 7 days ago and got some responses here:</p>
<p><a href=“http://talk.collegeconfidential.com/financial-aid-scholarships/1472727-1098-t-how-claim.html[/url]”>http://talk.collegeconfidential.com/financial-aid-scholarships/1472727-1098-t-how-claim.html</a></p>
<p>I would post in that thread and we need to know what you mean by ‘claim’. Taxable scholarships or expenses paid for the AOC? If for the AOC, soxfan is incorrect, you can claim what the student paid and you can claim expenses paid with loans.</p>
<p>But the other thread has some more detailed responses.</p>
<p>Depends on what you mean by “claim.” The amount paid for qualified tuition and fees is claimed on the return of the person who claims the student as a dependent. Usually the parents. If the amount of scholarships and fees exceeds the amount of tuition, that amount is claimed as income on the student’s return.</p>
<p>Yes than you I am looking back at that. I’m still trying to understand the basics of the 1098-T and the AOC to determine our next step. We’ve redone D’s taxes and did ours with the 1098-T income for her, and with it as income for us to compare the differences. What I am not sure of is if we claim her as our dependent then are we able to report the amount on the 1098-T as income on our taxes and take the AOC deduction. She otherwise has about $2000. in fast food worker income, but she did already file.</p>
<p>If she is your dependent, then you can claim the AOC.</p>
<p>With only $2,000 in income she probably qualifies as a dependent. Check the instructions about that at [Internal</a> Revenue Service](<a href=“http://www.IRS.gov%5DInternal”>http://www.IRS.gov)</p>
<p>You absolutely cannot report any taxable scholarship/grants your daughter has on your return. Her being your dependent doesn’t change that. If all her QEE for the AOC are covered by her scholarships/grants you don’t have any QEE to use for the AOC on your return unless she reports an additonal scholarship/grant amount as taxable. If the terms of the scholarships/grants allow it, she can allocate additional parts of her scholarships/grants toward room and board, report the additional amount on her return and pay tax if above the standard deduction and you can use those expenses for the AOC. A credit for you with her reporting more income is generally better for the family as a whole. Remember to include required books and supplies as QEE.</p>
<p>Thank you we were not sure if we could just put it all on our tax return. She does have taxable grant money that she used for room and board. I think in our situation her getting the AOC is more beneficial. We aren’t required to file and still haven’t determined if we will file or not. I’m trying to calculate the numbers and see what works best.<br>
Additionally another question that has come up is how does the taxable part of her grant affect her eligibility for the grant next year? It appears the grant money becoming taxable will put her outside the allowed income limits for the grant.</p>
<p>Tax dependents are not eligible for the AOC, only the parents. Up to $1000 of the AOC is refundable, so even if the parents don’t owe any tax or have to file, you can get money back, if you have the expenses to claim it.</p>
<p>There is a question on fafsa, likely on css profile too, that asks how much of AGI was taxable scholarships reported to IRS. That amount is subtracted from the student’s AGI for aid calculations.</p>
<p>Here’s the IRS Pub 970 link for all things educational:</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 appears if D is claiming herself as her own dependent for the $3800. deduction giving her a $600. savings in the taxes she owes which leaves her owing a little over $200. According to turbotax she is not eligible for the AOC, does that seem correct?</p>
<p>" Up to $1000 of the AOC is refundable, so even if the parents don’t owe any tax or have to file, you can get money back, if you have the expenses to claim it." Would these have to be educational expenses? It seems like turbo tax is not allowing any of us the AOC, is it because we aren’t eligible or a flaw in the software? Thank you again for your knowledge I’m trying to figure out what works best for us all financially and in conjunction with other programs.</p>
<p>Print out all the forms, and make your own spreadsheet so that you can compare everything side-by-side. Yes it is a pain to do that, but it is the only way to clearly see the results of different choices. For us, claiming the kid as dependent so we could get the full AOC was better even though she had to pay more tax.</p>
<p>Generally a student under 24 who isn’t claimed as a dependent by someone else can’t get the refundable part of the AOC. They should be able to get the part of the AOC that reduces tax owed. See page 17 of the Pub 970 link.</p>
<p>Yes, the expenses for the AOC have to be qualified education expenses(QEE, tuition, fees and required books and supplies). If QEE is covered by scholarships/grants you have to ‘artificially’ create QEE by shifting the scholarships/grants to room and board and have your daughter report the additional amount as taxable. There should be a way to tell TurboTax you are doing this. Read and understand each question TurboTax is asking using any extra help it provides.</p>
<p>If your daughter is claiming her own exemption, then you can’t claim the AOC.</p>
<p>Per the question in the other thread, use the bursar’s report and records of payment, not the 1098T. The expenses have to have been paid in 2012.</p>
<p>If the student does not have taxable income (her income from employment, plus any taxable scholarships) she will not get anything from the AOC, unless she can show that she supports herself. If she doesn’t support herself, she is not an independent student for tax purposes - even if the parents don’t claim her, she is not legally entitled to claim herself, because she is a full time student under 24.</p>
<p>For the parents, if they are not required to file, and the scholarships are structured such that they can be used to pay room & board instead of tuition, then they might be able to claim AOC. But the most they will get is 40% ($1000). If the daughter does owe any taxes, it probably only makes sense to claim the first $2000 of expenses, for $800 refund. The next $2000 of allowable expenses will only provide $200 more of credit - which would be less than the tax paid on the $2000 of taxable income. (The first $2000 results in up to 100% credit, the second $2000 results in 25% credit, and 40% of that is refundable - so net 10% of the second $2000).</p>
<p>Is there a provision to claim what was billed in 2012 on the bursar report for spring 2013 and paid by March of 2013? I thought I read that somewhere but I’m not sure. Her grant money for Spring 2013 went into her university account in December 2012 so it seems like that is included on her 1098-T. Thank you again.</p>
<p>form CTS “If she doesn’t support herself, she is not an independent student for tax purposes - even if the parents don’t claim her, she is not legally entitled to claim herself, because she is a full time student under 24.”</p>
<p>Is there an IRS publication that spells this out, turbo tax seems to allow her to claim herself. she had $2000. earned income, another $2000. nontaxable income and about $10,000. in taxable grants.</p>
<p>No - it had to be paid in 2013. If it was billed in 2012, but paid in 2013 keep a copy of the 1098-T, because you might need it for the 2013 tax return filed in 2014. </p>
<p>As others have suggested, the only purpose of the 1098-T is to show that she attended an eligible college. The accounting that goes into the way the 1098-T is reported doesn’t really match up with your taxes. The amount billed makes absolutely no difference, the amount PAID in 2012 is what matters.</p>
<p>The fact that they credited the grant money in December doesn’t mean you didn’t pay anything - that was just paid early, for amounts that would be billed in January.</p>
<p>It’s all in how you answer the questions. Turbo Tax should ask the question of whether she can be claimed by another taxpayer.</p>
<p>From page 10 of IRS Publication 501:</p>
<p>
This is why it bothers me to hear families discussing “which way is more beneficial” as the rules are pretty cut and dried.</p>
<p>To determine if she can be claimed by the parents, see Qualifying Child" on page 11 & 12. There are 5 tests:</p>
<p>1 - relationship, which she passes as their child
2 - age, which she passes as a full time student under 24
3 - Residency, lived with you more than half the year (note that living at schools is considered a temporary absence, not moving out, particularly if the “home of record” is the parents’ home).
4 - Support - did she provide less than half of her own support (she could fail this if she takes out significant loans in her name only and works during the summer - scholarships don’t play into the equation)
5 - Joint return - she isn’t filing a joint return with her own spouse (who supports them both).</p>
<p>Again, if they (or any other relative who lives with her/them) are allowed to claim her, she cannot claim herself.</p>
<p>It appears she can claim herself based on providing more than half her support through earnings, s.s., and loans. It does seem that many people do their taxes both ways and use the method that yields the best results, is doing this somehow an accepted practice?<br>
Most of the information I have found relates to families trying to create “independent students” that is not our goal, ironically one of my concerns was that if she claimed herself she would become an independent student, I now know that is not the case. Since we have no taxable income it is better for her to claim herself since it results in reducing her tax debt by about $700. I still need to determine if claiming herself will have any other ramifications in regards to grants and health insurance. I am surprised that we were never forewarned that she would owe so much tax on the grants by the financial aid office or the grant provider, had we known we would have made some different decisions in the past year and been more prepared to pay the cost of the taxes.
To annoying dad I am not sure how to move information from this thread to the other one, I honestly stumble through using the site. Thank you again for the helpful information.</p>