<p>One of my kids receives very generous financial aid from a college. I only paid $1K-$2K. (Don't worry: I paid plenty for my other kid.) The 1098 says (for example) "amount billed for tuition" $35K and "scholarships or grants" $43,500. When I put it in Turbo Tax, it just subtracts the $35K from $43500 and says I'm not eligible for any tax credit. But, but, but.... I <em>did</em> pay $1K-$2K. Is Turbo Tax right and, if not, does anyone know how I can put it in Turbo Tax? </p>
<p>Also, the school put in over $3K in "adjustments to scholarships or grants for a prior year." Do I have to amend the previous year's tax forms? I guess they're saying they increased the previous year's financial aid but, honestly, I don't quite understand how this school fills out the form. (My other kid's school does it in a way that makes sense to me.) This college put in the entire year's tuition and financial aid at the beginning of the year, even though we haven't paid it yet. This year (2009-2010), my kid is taking off Spring semester but they have written down that they've filled out the form with the annual amounts, not the semester. Obviously, we aren't receiving Spring scholarship nor are we paying tuition.</p>
<p>The $ is financial aid-- Pell and school grant. It does not specify what monies went to what. But, on top of that, the same child took classes at a local college in the summer and those weren’t covered by financial aid so I did pay that (tuition/ fees/ books)-- but I don’t have a 1098 from that school. So I’m pretty sure I should be able to claim it, but Turbo Tax won’t let me. </p>
<p>Should I ask the regular college to redo the 1098? Like I said, they put the whole year’s tuition and financial aid (2009-2010) even though the student is off this semester. And should I ask the local college for a 1098 or just go ahead and fill it out my taxes with the right amount?</p>
<p>No, because the grants were definitely enough to pay for tuition and books. By the time you were paying money, you were paying for extras (like room and board) that aren’t “qualified educational expenses”. </p>
<p>If you paid separately for summer classes that would qualify, at a different college – then maybe you could take a credit for those – but you definitely should have a written record. I did have a time when my daughter enrolled in a university course (while still in high school) that cost about $500 --and I think I did take a credit for that – but I also received a 1098T from the school in question.</p>
<p>I have a written record-- but they didn’t send a 1098. </p>
<p>Should I insist on a 1098 from the local college or just write in what I paid? And should I have the first (main) college correct their 1098 to reflect that she was only in attendance one semester? I need to get this filed today (obviously) so I’m thinking of just filling out the tax form with the correct info and asking them the school to correct the 1098.</p>
<p>By the way, part of what is confusing me with the primary college is that last year, I assumed exactly what you did-- that financial aid $ went first to tuition, then room and board so that anything I paid must go to room and board. But I read of parents here who basically posted, ‘Who is to say that my $ went to room if the scholarship didn’t say it was for tuition?’ and they claimed the deduction. So far, have not found anything in the school literature that says that financial aid goes first to tuition. The school is 100% residential so all kids pay tuition/room/board.</p>
<p>The 1098 is supposedly the worst and most useless IRS form there is. There is no set way for calculating. Some schools go by terms, some go by actual time payments come in. </p>
<p>My understanding is if the aid is not specific, your student could claim some of it as a taxable scholarship and pay taxes on it. This would allow you to claim the AO credit. If the kid has no other source of income, then they will still be well below the threshold of even owing any tax even if you take the maximum credit, provided you or the student have paid at least the amount you are claiming with your money or loans, even loans in the student’s name. Even is the student pays taxes already, you can get dollar for dollar on the first $1500 (I think) while they would be paying 10 or 15% on the same $1500. Still a win for the family.</p>
<p>However, since you said tuition was 35K and schollys/grants are 43.5K, your student shoudl be claiming the overage ($8500) as income already. New this year you can also add books to the $35K number.</p>
<p>Well, that’s what the form says. But since the student took off the Spring, in fact, the real amounts billed and the real amount of financial aid was half that. I just got off the phone with the college and they said to just half the amounts but they’re not sending a corrected 1098. They’ll put it in the adjustment column for next year. But if I half the amount, and considering I did pay those summer courses, the student has no taxable income-- and doesn’t need to file. Except the IRS will get this 1098 saying we received $8,500. I’m sooooo confused.</p>
<p>Oh, and they said the $3K in the adjustment column was a decrease in aid that took place last year. So now I guess we have to amend the 2008 tax return to get back the overpaid taxes?</p>
<p>There is some leeway in how you make your payments and as a result, get your credits. If you paid in Nov or Dec 2009 for the Spring 2010 semester, then it goes on the 2009 taxes. If you paid this year, then it is on 2010. Maybe next year it would be better to wait until January 2011 to pay the Spring 2011 bill and put it on the 2011 taxes. Everyone needs to look at their own circumstances, especially when the student becomes a senior. If you are over the max credit then for just the Fall payments, it might be better to get that extra year of credit by waiting until Jan to pay.</p>
<p>Interesting… but in my situation, I didn’t pay Spring 2010 in Dec or Jan. The student is on leave this semester-- but the school included the full year’s tuition and financial aid on the form. They’re telling me to halve the information on the form but I wonder if that won’t trigger an audit since the IRS will have a document saying the student received thousands more.</p>
<p>You simply need to spend time reading the IRS Publication (I believe 970) that covers tax benefits for education.</p>
<p>Your situation is complex and important information is being left out of your posts (for example, you didn’t say anything about the community college in post #1). Rather than trying to have people guess at what you need to do, spend some time and read the publication. It will tell exactly what you need to do and what tax benefits you can receive.</p>