$17K in FinAid, how to report on FAFSA?

Thanks, I’m looking through the publication tonight. She is a freshman so yes I’m only thinking about the fall but I
wasn’t thinking when I was writing that. I just looked at her 1098T on the school website( amazing what you can find when you look)

For 2014- Amounts Billed for qualified tuition and related expenses 18,948.00
- Scholarships or Grants 15,294.00

That is just for tuition and fees not room and board. Includes no books. Everything was also billed in 2014, Spring 2015 was billed in December with the OOS tuition paid in December . I’m still a little confused as to what the answer is though

spunk61, travel is not a QEE. The Pell is going to be split between fall and spring, and probably the other scholarships too. Don’t worry about loans - that’s just money you/she paid, no different for tax purposes than if you took it out of your wallet.

I noticed on my daughter’s 1098 it had the spring tuition and fees included on the form, but not the scholarships and grants. In fact, if I look at her account on line, the costs are all posted but not the spring scholarships and grants. I’m separating all the fall and spring tuition/fees out from the 1098 and counting them in 2015, not 2014.

For my other daughter, I actually did pay her tuition in Dec so I’ll count that in 2014, allowed because it is for tuition within 3 months of when paid.

After reading over publication 970 (thank you annoyingdad) and figuring out what expenses are allowed ,basically tuition,fees and books (no room and board or travel etc.) And as long as there are no requirements on the scholarships like working them off as in services to be performed for the money. They would be considered tax free and do not need to be reported as income. In my D’s case her expenses that she could use her scholarships for totaled $9464 and she received $10192 leaving an extra $728. I’m not exactly sure how much she spent on books but it was an expense of about $500 which were all on credit cards. So in my eyes I see only $ 228 that could be taxable. Does that seem to make sense?

Depending on her other earnings, you might want to declare more of her scholarships as taxable so that you can take the AOTC credit.

Well it seems you understand the concepts well. That you’re saying there were more scholarships/grants than QEE doesn’t match up with the 1098T but that could be because of what was billed and credited in December for spring. How to treat the billing and crediting in December complicates things. From what you posted and from the 1098T it doesn’t seem there was enough excess for her to have to file a return and therefore she won’t have reported an amount in her AGI. Did she have any withholding from the $600 she earned that she would want to get back?

If you care to divide up the amounts the way I’ve listed below it would help us check your numbers and also, if you care to get into it, take a look at what you may be able to claim for the AOTC(chapter 2 of pub 970, you haven’t done enough reading, right?).

  1. Tuition and fees for fall billed in 2014
  2. The amount of scholarships/grants credited for fall in 2014
  3. The total amount paid out of pocket to the university for fall in 2014 by your family including amounts credited from loan funds
  4. Tuition and fees for spring billed in 2014
  5. The amount of scholarships/grants for spring credited in 2014
  6. The total amount paid out of pocket to the university(if any) in 2014 for spring by your family including amounts credited from loan funds
  7. The amount paid for required books and supplies purchased in 2014 regardless of whether they are for fall or spring.

I did just read chapter 2. I don’t know why everything has to be so complicated. It seems like all her scholarships and grants end up covering her tuition and fees. So she is basically using her loans to cover room and board and I’m covering the rest of her living expenses and travel. So am I eligible to deduct anything or get any tax credits?

  1. totaled $9464
  2.         $10192
    
  3. i guess that would be 0
  4. I see that it was billed in December but not credited till Jan
  5. 0
  6. 0
  7. 500 ±

I dont follow the 1098T though. It seems to list the the total school year billed expenses minus room and board and just about the entire scholarship total minus one semester of the out of state tuition waiver. But all in 2014, I don’t follow why its not split up in half

For 2014- Amounts Billed for qualified tuition and related expenses 18,948.00

  • Scholarships or Grants 15,294.00

The key concept is Post #43: @spunk61 pay close attention to that post. Do you want up to $2500 in free money for up to 4 years?

ok, clarification on some of the 7 items.

For 3), you said above you were covering $9000 of costs for the year and your daughter was taking $5500 in loans for the year. Wasn’t some of your contribution paid to the U for fall semester and some of the loans credited to her account for fall semester? 3) isn’t asking for just what you or loans paid for tuition and fees, but what you or loans paid the U for anything.

For 4) and 5) what exactly was billed in December and for how much? In post #40 you said OOS tuition was paid in December. Paid by whom? Or did you mean her spring OOS scholarship was credited in December?

The 1098T is going to reflect amounts billed in 2014 and scholarships credited in 2014 including those related to spring semester. Box 7 should be checked. Is it?

Thank you Madison 85, yes I would like $2500 per year. I’m just not sure how to answer that question as to how much is taxable
And Thanks annoyingdad( why does it seem wrong to write that?) i don’t totally understand your question # 3 above and bx #7 is checked on the 1098T
I copied her billing statement from the beginning of Dec. up to the present for some clarity. Starting from a credit on her account of $440.68 up to a current credit now of $1063.36. look at Dec 10, it seems the Non Resident fee was charged and paid. I hope this helps a little and I’m sure you may have some more questions. Thank you though very much

Date Term Code Description Doc / Inv# Charges Credits Balance
06-JAN-2015 Spring 2015 Lab Printing Fee LABPRDEC 1.82 - 1,063.36
05-JAN-2015 Spring 2015 Pell 1,840.00 -1,065.18
05-JAN-2015 Spring 2015 Choral Scholarship 2,500.00 774.82
05-JAN-2015 Spring 2015 Direct UnSub Stafford Loan 990.00 3,274.82
5-JAN-2015 Spring 2015 Gold Award Scholarship 750.00 4,264.82
05-JAN-2015 Spring 2015 Direct Sub Stafford Loan 1,732.00 5,014.82
17-DEC-2014 Spring 2015 Music Dept.-Private Lesson Fee 225.00 6,746.82
11-DEC-2014 Spring 2015 Greek, 50 Block, $325 /FlexMEAL 756.00 6,521.82
10-DEC-2014 Spring 2015 Chorus NR Exemption 5,102.00 5,765.82
10-DEC-2014 Spring 2015 Resident Tuition UG - Main 3,520.00 10,867.82
10-DEC-2014 Spring 2015 Biological Science Lab Fee 20.00 7,347.82
10-DEC-2014 Spring 2015 Capital Improvement Fee-Main 50.00 7,327.82
10-DEC-2014 Spring 2015 Non-Resident Fee UG - Main 5,669.00 7,277.82
10-DEC-2014 Spring 2015 Student Housing-Hull Hall 1,936.00 1,608.82
02-DEC-2014 Fall 2014 Student Health Center Charges 110.00 -327.18
02-DEC-2014 Fall 2014 Lab Printing Fee LABPRNOV 3.50 -437.18
01-DEC-2014 Fall 2014 Instructional Media Printing 00000MML .50 -440.68

I tried to separate that so it was easier to read as to whats a charge and what was a credit but when I posted it ,it just reverted back . I think if you look at Dec 10th you might be able to figure out that part.

Re question number 3.

In your first post you said this:

“She took a $5500 loan out and I’m covering the rest which is about $9000.”

Did you pay any of that $9000 in fall and did half her loan amount get credited to her account in fall? I’m asking how much of each of those was paid/credited to the university in fall.

Just to explain further what people are getting at with the AOTC. You read the chapter in Pub 970 and you know that qualified expenses have to be reduced by ** tax-free** scholarships and grants. You can turn tax-free scholarships/grants into taxable scholarships/grants by having your daughter include additional amounts of scholarships/grants in her income. The maximum qualified expenses you need for the max AOTC is $4000. Since she only has $600 of other income she would still be below her $6200 standard deduction and not owe any tax and you could get the AOTC.

Read examples 1 and 2 on page 13 of Pub 970 and examples 1, 2 and 3 on page 14.

Half of her loan amount was credited in the fall. The $9000 approx is for the whole year but that is just for living expenses, travel etc. I’m also paying a sorority bill which is just adding to the problem but not included in the $9000 yearly expenses. One of her scholarships from the music dept. is $5000 per year or $2500 for the fall. Can she just claim that as taxable with her $600 income? Or do I claim that? I’m hoping my accountant can help me on this one but I’m questioning whether she will. I just want to submit the Fafsa and go on to my next issue a broken washing machine. Whose to say whether her loan paid the tuition or her scholarships?

You are ‘to say’ that the loan paid tuition or rent - that’s the whole point of declaring the scholarship ‘taxable’. You don’t have to specifically say ‘the music scholarship was used for rent’ just that $4000+ was paid for tuition and the rest is taxable scholarship.

You don’t report any of her tax-related scholarship/grant items on your tax return.

*She *can likely say (i.e. designate) that her loan paid tuition and some scholarships paid room/board.

Did any scholarships or grants expressly have language stating they could only be used for tuition?

No as far as I know they were just scholarships. So if I follow what you’re saying, in my financial section I just say $.00 and for her question of taxable scholarships I would say $4000 or more like $4000 plus her $600 dollar income.? That would still leave her with no tax to pay but then who gets the credit?

You get the credit.

I would think the OOS tuition scholarship can only be used for tuition but there is enough from other scholarships/grants that likely don’t stipulate.

spunk, that December bill is very complicated and I don’t feel comfortable telling you how to treat the items, whether they are for 2014 or 2015. It’s beyond my knowledge. I do see the sub and unsub loans in December which are definitely expenses paid in 2014. But they do need to be offset by scholarships/grants though.

The only thing you claim is the AOTC if you decide your daughter should include some amount of taxable scholarship/grants in her income. You wouldn’t include her $600 of income in answer to the fafsa question you are asking about.

SInce you have an accountant, I would recommend letting her sort out how to do this. The thing is that not all accountants are that versed in the educational topics. Especially the part about being able to ‘free-up’ expenses for the AOTC by having your daughter include more scholarship money in her income. You may have to point that out to her in Pub 970.

The other complication you have is state taxes. My state treats taxable scholarships as unearned income for the standard deduction, while for federal, for the standard deduction and having to file, they are treated as earned income(see posts 31 and 32 in this thread). So reporting more income on my son’s state return always resulted in him owing a little more state tax.

You also have the fact for state tax that your D is a NY resident but attends school in MS. I don’t know how either state defines income that has to be reported for that state and how taxable scholarships are treated in each of those states.

I guess my main issue right now (beside the fact that my wife is flipping out about the washing machine not working)
is just submitting the FAFSA. Maybe I should just list $4000 under her taxable scholarship question. Finish the rest of the form and then when I do my taxes and talk to my accountant square it all away when I have to do the data retrieval part sometime before April. Does that make sense to all you very helpful people?

As a returning student your D likely has a later deadline for fafsa than entering freshmen.

All you are doing now with fafsa is estimating, so yes it will be all squared up when you file taxes. How you answer that question isn’t going to affect your efc. If she reports an AGI of $4600 and you put $4000 for that question, then $4000 is subtracted in the formula from her AGI so she isn’t penalized for having taxable scholarships. That’s the same as her reporting $600 of income on fafsa and nothing for that question. And in either case, it’s below the $6310 student income allowance.

There’s also a question on fafsa regarding how much in non-refundable education credits the parents received. That amount is added to the amount of tax actually paid so you aren’t penalized on fafsa for having received education credits. The amount of tax you pay is subtracted from available income because it’s not available for college expenses.