Anyone use HR Block? AOC and scholarship question.

Paying for College
1

I keep confusing myself and need some insight. On the 1098-T, box 1 which is Qualified expenses is $20,208. Box 2 which is scholarships is $33118. So that means there was $12910 in taxable scholarship income that was used for room, board, etc.
So I have entered all that correctly, but on the next screen, it says “Now tell us if Jacob will include any of the remailing grants and scholarships in income” then " Grants or scholarships you’re including in income. " _______________

So what do I put here? Taxable? Non-taxed? We would like to include about $10,000 of the taxable on his return under Scholarships.

Any insight would be appreciated…the way it is worded referring to if he is including and then immediately referring to “you’re income” is confusing. And interestingly enough, any amount I put here does not seem to increase our taxes. Weird!

The goal is to claim the AOC.

2

Have your verified that the numbers the school put on the 1098-T are accurate? Very often they are not accurate.

Are you the student? A parent? Whose tax return is being worked on here?

If you are not working on a tax return for the student, that may be the reason why changing the amount of taxable scholarships does not change the amount of tax. Taxable scholarships go on the student’a tax return, and any tax on the scholarships is assesd to and paid by the student.

For who?

Getting tax advice at this level from a stranger on the internet is a really bad idea. I would start first with H&R Block customer tax assistance, and then go to a local tax professional, if necessary.

3

Yes, make sure the amount of tuition and fees paid during 2019 and scholarships received in 2019 is correct.
Book expenses are not usually included on the 1098T but can also be included in qualified education expenses.

On the tax software I used there was an option to enter the 1098T and then put what amount of scholarships was used for room and board, that makes it then taxable.

If there was $12,910 more in scholarships than QEE then are you sure you don’t have to report more taxable scholarships than that on your son’s return, to be able to claim the AOTC?

4

I am working on the parent return for us to get the AOC because we are claiming him as a dependant. And the 1098-T is correct.
A

5

You need to have qualified education expenses that were not paid for with tax advantaged funds to claim AOTC.

So if a tax free scholarship covers tuition then you can’t claim the same expenses towards AOTC.

How much AOTC were you hoping to claim?

Did your son have a scholarship specifically for tuition?

The AOTC is claimed on the parent tax return but the taxable scholarships are reported on the child’s return.

6

Alternatively, the AOTC can be claimed on the student’s tax return, as long as the student is not claimed as a dependent on someone else’s return (even if another tax payer could have claimed the student as a tax dependent).