1098T excess scholarship income Box 5

Paying for College
1

<p>SITUATION: Both college kids have excess scholarship income...a great situation until tax time!</p>

<p>Daughter graduated from college in May 2012 and we were fortunate that she won a full tuition scholarship in her senior year. So, for the first time in her 4 years of school, her 2012 1098T box 5 Scholarship amount is greater than box 2 amount billed. Added to this is that her school put spring 2012 tuition and fees on last year's (2011)1098T but put Spring 2012 Pell and TAP on this 1098T. She used her Pell to pay toward room and board.
The TAP was used by the school for tuition and then they covered the remainder of her tuition with a merit scholarship. In addition, she has earned income from part time jobs of $6092 so she is over the standard deduction amount with her total "income".</p>

<p>So what we have for daughter is:
Box 2 qualified expenses: $859 (which are her spring books and a class supply fee)
Box 5 $5225 ($2772 Pell & $2450 TAP)
The difference is $4366.</p>

<p>My son, a first year student, has a full tuition merit scholarhip as well and also has a greater amount in Box 5 than in Box 2 (an excess of $6600 before we subtract out his books which are not on the 1098T). He too has income ($1868) from a part time job.</p>

<p>I will definitely be claiming my son as a dependent but don't know what the right choice is for my daughter. She is 22 but because she was in school for 5 months, I think I can still claim her as a dependent if that is advantageous.</p>

<p>QUESTIONS:
Would it be better to have my daughter claim the excess scholarship income and pay the tax? She is living away from home in another city as a Jesuit Volunteer and earns a very modest stipend. She winds up paying 10% federal tax and 4% state tax in this scenario.</p>

<p>Or, is there some way of filing our taxes so that I can claim the American Opportunity Credit (as I've done in past years for her)?</p>

<p>The same question for my son's situation....</p>

<p>My earned income was low for 2012 (am widowed so there is no additional parent income) so my tax liability is about the same as my daughter's. </p>

<p>This is so complicated and confusing. Any help would be GREATLY appreciated.</p>

2

<p>You can claim the AOC for four tax years for each child. If you already claimed it in four years for your daughter, you can’t claim it any more.</p>

<p>Was the scholarship only for tuition, or did it cover other things? If it just covered tuition, It isn’t taxable. If some went for books or housing that part would be taxable. </p>

<p>You probably should make your own breakdown of everything by the dates paid or credited, and by the semester the scholarship is for. Then use your figures rather than what appears on the 1098t. Just make sure you don’t ask for AOC or Lifetime Learning Credit for the same chunk of money more than once.</p>

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<p>Does anybody know HOW to add the excess scholarship money on the income line when you use tax act?</p>

<p>I can’t figure out how to identify the scholarship money as income. I read on a thread I started is that you identify it with the letters SCH and you put it on the line? but what line? and can you do that with Tax Act program?</p>

<p>ETA: I found my answer…He’s income is so small that he doesn’t need to file…per Publication 970</p>

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<p>Your last post confuses me. Yes, your son has a small earned income from wages but when you add the scholarship income that is in excess of tuition, his total income requires filing a tax return. In your first post you asked if you could claim AOC for him. If his scholarship is indeed a tuition scholarship, any part of that which you intend to claim towards AOC will also have to be claimed as taxable income by your son.</p>