<p>It looks like I forgot to include the American Opportunity Tax Credit on my 2011 tax return for my daughters tuition and books. Using Turbotax, I am getting some strange numbers and hope someone can help me do it right this time. My daughter was a freshman in the fall of 2011.</p>
<p>Reported from 1098T
- Payments received (Box 1) - [left blank]
- Billed for qualified tuition and related expenses (Box 2) - $39,000
- Scholarships and Grants (Box 5) - $12,500</p>
<p>The problem I am having is that turbo tax uses the actual amount paid for tuition in 2011 entered apart from the 1098T which in my case was about half the amount billed or $19,500. HOWEVER it uses the full year worth of scholarships ($12,500) versus only $6,250 (the amount that was actually applied to the fall 2011 bill). Net it is saying I have only about $7000 in qualifying expenses to get the credit versus what in my mind should be more like $13,250 which is reflective of only half the scholarship that was actually applied to the fall 2011 semester. Either way I think under either treatment, I have enough paid to get the full credit of $2,500 but would like to do this correctly on the 1040X so I dont cause problems going forward and the way turbo tax is doing this it just does not seem right. </p>
<p>Should I change the amount on 1098T for scholarships to be only half of what was reported (the actual amount applied in 2011)?</p>
<p>Thanks</p>
<p>Yes, that is what I would do. I often found I had to tweak the 1098T information as schools are very inconsistent in how they do them and Turbo tax and other tax software do not take into account situations such as yours. </p>
<p>Just make sure you keep copies of documents showing how you came up with your figures.</p>
<p>caveat: this is not meant as tax advice so do your own research</p>
<p>I too had a school which was not consistent with tuition charged and scholarships given. In our case, tuition was shown for the calendar year (because payments were due by the end of Dec) but scholarships were shown for the school year (because sp sem FA wasn’t alloted until Jan). My biggest concern was for the final year, which would show scholarship money given for sp sem of sr year, but no tuition charged since it was in the previous 1089T.</p>
<p>I kept good records of all charges and accounted for everything by the calendar year, just like everything else in my taxes.</p>
<p>OP,
If your D only got the scholarship of $6250 (not $12500) in year 2011, you should attached a note to your 1040X form, explaining why your number for scholarship is correct.</p>
<p>You should always talk to a tax expert for all tax questions.</p>
<p>I’m not a tax expert but IMHO opinion, Turbotax is doing it correctly. If a scholarship/grant for spring 2012 was credited to your account in December 2011, that’s when you ‘received it’ and that’s how everything else with taxes works. If you paid the bill in January 2012, then that’s when you paid it and everything else in taxes works like that too, it’s when you put the check in the mail or when you pay online with a credit card for medical, property taxes, whatever.</p>
<p>Since you say it really doesn’t affect you, I think that’s the safest way to do it. For someone who is affected, it would have the effect of delaying the benefit from 1st semester freshman year to 2nd semester senior year assuming the kid graduates in 4 years and the school does it’s crediting/billing in a consistent way.</p>
<p>1098Ts aren’t always accurate but if you go to the source documents, cancelled checks, bills or online account records, you should see when things were actually paid and when scholarships/grants were credited and those dates should match up with the 1098T.</p>
<p>The 1098T may have box 7 marked stating that the figures may include amounts for an academic period beginning January-May 2012. I believe that was on the form that year (certainly is for 2012-2013).Check your statement with the registrar that should show that 1/2 the scholarship was credited for first semester 2011 and the other 1/2 in 2012. You would count only the funds that you paid out in 2011. As long as you have $4000 not covered by scholarship you should receive the entire credit.</p>
<p>$4000 is the maximum you can claim for qualifying education expenses, so anything over that is moot. It looks like you have enough qualifying expenses that you’ll be fine for all 4 years (if the AOC is available), no matter how the college calculates it across years. I’d just leave it alone and go with what’s on the 1098T: It’s easily qualifying you for the maximum tax credit. Less to explain on the amended return.</p>
<p>Box 7 only applies to boxes 1 and 2. Were amounts billed or payed in December for spring semester, depending on whether the school filled in box 1 or 2. Most schools report box 2. Box 7 doesn’t apply to scholarships/grant amounts in box 5.</p>
<p>My school filled in Box 2. Thats not the problem though as you report actual paid regardless so I just enter in turbo tax what is paid. The problem is that box 7 is for the scholarship for the whole school year and their is no other entry other than the 1098 T entry. So the only fix I have is to enter an amount on the 1098T entry form in Turbo tax that is different than the amount reported. Incredibly frustrating!!!</p>
<p>It doesn’t matter, because either way you have more than $4000 qualifying expenses. No matter what you do in turbotax, the forms are still going to be filled the same way - with $4000 of qualifying expenses. The only way the rest of the money would make a difference is if you were trying to qualify for Lifetime learning Credit. But AOC is more beneficial, so you don’t want to do that (you can’t do both).</p>
<p>As for looking toward Senior year, the IRS cares when the bill is paid, not what semester the tuition is for. If you paid it in December, for January enrollment, you still paid it in December. It is appropriate for them to credit scholarships for the final term in that tax year - and it benefits some people to do so. If you pay the final semester bill in January, you deduct the scholarship before calculating any tax benefits - which in most cases as a Senior would be Tuition and Fees Deduction or Lifetime Learning Credit, because AOC can only be claimed 4 years.</p>