What the Box 2 on 1098 represent ? ( Tuition + books + Fees + ??? )
Box 5 we can see represent the Scholarship + Grants and it matches what the student was granted.
Box 5 is less then half then Box 2. ( ~45k - ~20k )
Student did work Federal Work study and get ~1.5k for yr 2014 Fall.
Trying to figure out how these numbers will be represented in Parents Joint Tax return filled by using Turbo Tax Online.
Student will still be a dependent on Parents 1040. Parents paid the rest of the Tuition fees. Can Parent apply for AOTC ?
What Form does Student need to File, 1040EZ or 86xx
It’s rare that books would be included in box 2. Generally students buy their books many places and even buying from the school bookstore seldom results in the charges showing on the 1098T through the billing office. Though my son did have his Chemistry goggles billed with his tuition and fees and be included on his 1098T one year.
You should review all the charges on your bills and the student account and compare those charges with Box 2. Is Box 7 checked? If so, you can’t use the amount in Box 2 that is for spring 2015 for the 2014 AOTC unless you actually paid the spring charges in 2014.
Did the student have enough income to be required to file a return? Only the parent can take the AOTC when the student is a dependent.
Yes Box 7 is checked. We are trying to figure out how they come up with that number in Box 2. So if Books not included then it must be Scholarship/grants and Fees for Full 1 yr ( Fall 2014 and Spring 2015).
Student income is ~1.5k so not enough to file a tax return… And he claim Exempted so no Tax was taken from the paychecks.
Does box 5 also include scholarships/grants for the full year? You should be able to look at all your bills and add up all amounts charged in 2014 for qualified expenses and it should equal the amount in Box 2. No scholarship/grant amounts would be included in Box 2. Also from the bills add up all scholarships/grants credited in 2014 and that should match box 5. But you can only use amounts you actually paid in 2014 for the 2014 AOTC.
Box 5 amount exactly matches the amount student was given for scholarship/grant for yr 2014.
Seems like Box 2 is very close to amount for Full academic yr 2014/2015 ( Tuition + Fees + more ).
So 45k / 2 = 22.5k approx per semester. So we paid 2.5k more then the 20k Scholarship/grant in 2014.
2015 Tuition fees was paid in 2015 not 2014…
So we trying to figure out how much we can use for AOTC for 2014 …
Given your rough numbers, it appears you have $2500 in QEE for the 2014 AOTC. But taxes are a precise thing, not a rough thing. The tuition and standard fees may be equal amounts between fall and spring but the “+more” may not be. You need to look at the bills and/or the student’s online account and determine what the “+ more” is exactly. Perhaps you were charged an orientation fee in fall that only applies to fall. If so, you have more QEE for 2014. Perhaps there’s an extra charge of some kind for spring, then you wouldn’t have as much QEE for 2014.
Regarding what Madison85 mentioned, did you pay non-QEE expenses in 2014 such as R&B?. As it stands your student has $20k of tax-free scholarships in 2014. If the student were to include $1500 of those tax-free scholarships in their income, reducing tax-free scholarships to $18.5k, then you would have $1500 more QEE for the AOTC, $4000 total.
The link below primarily mentions Pell grants but does mention the idea applies to any scholarships or grants that aren’t required to be used for QEE. The link is from the IRS.
Read IRS Pub 970. It even gives some useful examples of dealing with the AOTC, 529 accts withdrawals, counting some scholarship funds as taxable in order to max out the AOTC, as annoyingdad linked to above, etc.
REMEMBER - student loans, whether taken out by the student or the parent, count as “money paid by you” for purposes of the AOTC. Student loans, even those which are part of the student’s financial aid package such as Stafford and Perkins, will not show up on the 1098T.
Yet another reason why the 1098T is a nearly worthless document. Do an “advanced search” here with 1098T in the top line of the search, then my user name in the search-by-user-name box. This will lead you to various useful and detailed threads with great contributions from other posters from the past few years and will explain why you need to REFER TO YOUR CHILD’S FINANCIAL AID AWARD LETTER AND BILLING STATEMENTS AND YOUR OWN RECORDS (including receipts for books and required equipment) AND IGNORE THE 1098T.
( some of those threads also discuss matching up scholarships/grants with the school term for which they were intended rather than the calendar year, when it comes to dealing withthe issue of “taxable scholarships/grants”- very useful. Some also have quotes by CPA types also stating just how useless the 1098T is. )
There is a wealth of good info here from the past few years that can be found by searching. Doesn’t make sense to reinvent the wheel every single year. if I have time later I can provide some links.
Yes I agree that 1098-T is not accurate, in our case I am seeing that 1098-T is reporting $116 less then what we paid for Tuition and Fees in 2014. Our QEE is coming out to be $2995 as per 1098-T.
So as per others had mention we can move ~$1005 as Student income from the Scholarship $$.
Then we can have $4000 as QEE. Since Student only made $1500 as income plus $1005 he still wont be paying any Tax. So on 1040EZ he need to show this extra income of $1005…
I read the links and those e.g on page 4 made it very clear how to move $$ amount between Scholarships and income.
to get the most out of AOTC.
No Stafford or other loan as part of the FA package?
don’t forget amounts spent on books and required supplies/equipment.
One “discrepancy” that can show up on 1098Ts is due to the fact that not all “fees” are considered as QEEs per the IRS. The most common one is Student Health fees, also parking fees, and any other fee that is not mandatory as a condition of attendance ( even though the Student Health fee is almost always mandatory - grrrrr.)
^^
Student did took out Stafford loan and its not part of 1098-T as expected.
Yes the Fees are combination of Health, Student center and Athletic fees.
And the difference was the Health Fees which was not showing up on the 1098-T $116.
We bought all the books through Amazon for ~ $600 plus Laptop, Calculator and misc supplies…
While the student wouldn’t be required to file a return with just the amount of taxable scholarships and work-study income, I personally would file to document with the IRS that the student did include the taxable scholarships in their income. It also allows use of the DRT for updating fafsa.
Be sure to enter the work study amount in the fafsa question concerning income from need-based employment and the reported scholarship amount in the question concerning taxable scholarships reported to the IRS in AGI if the student does file a return. That way the student doesn’t get penalized for that income, though it’s still below the fafsa student income allowance.
The amount of the Stafford loan that was credited to your child’s account counts toward the AOTC, so you may not need to shift ANY of the scholarship/grants to the taxable category.
see the section of Pub. 970 that deals with the AOTC, and/or some of my posts from a couple of years back on the subject.
Required books count as QEE, so their cost can be used as part of the APTC,but not laptops, calculators, misc supplies.
@MomCat2
thanks for your info… it really helps…
I will start plugging in my numbers this weekend in turbo tax and see how AOTC help with taxable income…
That’s not correct. Qualified expenses paid with loan funds count toward the AOTC. The limitation in the OP’s situation is that there is a shortage of qualified expenses for the full AOTC due to scholarships/grants. So some of the loans therefore went toward non-QEE unless the student includes additional taxable scholarships/grants in their income.
ETA: The quote from Pub 970 is:
But loans don’t create additional qualified education expenses.
You are right, annoyingdad - loans don’t create additional qualified educational expenses. Sorry that my post seemed to imply otherwise.
So in this particular situation, some grant money will need to be shifted to the student’s income as a taxable schol/grant.
But it is very useful for parents (in other situations) to remember the part of Pub. 970 you quoted above re: loan proceeds and the American Opportunity Credit.
It did ask about 1098-T, and then it asked about each box in 1098-T
From Box #2 I have to put the Full amount but then below it asked what the student actually pay for Tuition and other related expenses in 2014 ( Tution, books, eqp and even Computer if its required by the school ). So I have to add those numbers and went slightly above $4k so It gave me the full $2.5k AOTC. Student dont need to shift any money from grants to taxable any more since its covered on my Return now.
My Fedaral/State Taxes all done and ready to be e-File.
One thing changed in Turbo Tax this year is that Deluxe edition dont supports Schedule-D ( Investment, stocks) anymore, you need premium edition. So they charged me $30 on the spot and will send me a refund of $25 in Check for using Premium edition.
Thanks to everyone for their insight in 1098-T and AOTC…
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