<p>We are working on preparing our taxes for the first time since we have a child in college. We will be using the expertise of a tax accountant but any suggestions of the type of information we should provide them? From what I have heard, tuition is tax deductable; room and board is not? Assuming books are tax deductable but what about the laptop? Any school supplies tax deductable? How are merit scholarships figured into the mix? Anything else we should know for the first time around with college expenses and the tax man? Thank you!</p>
<p>Did the school give your student a form 1098T? While it’s in the students name, it will have info useful for determining credits/deductions you can take. Also bills from the school and documentation of payments you made will be useful. For the education credits/deductions, tuition, mandatory fees and mandatory books and supplies are qualified education expenses. Laptops generally are not mandatory. </p>
<p>Scholarships/grants in excess of qualified expenses are taxable to the student. If the terms of the scholarship/grant don’t require they be used for tuition, you could allow them to be applied toward room and board and apply payments you made to tuition. That would increase the tax your son may owe, but your credit would likely be more.</p>
<p>Room and board is only qualified for the purpose of using 529 or Coverdell funds to pay for them.</p>
<p>Your accountant hopefully is knowledgeable about this area.</p>
<p>There are a couple of threads that discuss tax issues like this in the Financial Aid Forum. You should pop over there, and take a look. For specific instructions on handling college expenses, you can read through IRS Pub 970.</p>
<p>Books and materials that are specifically listed in the course description or that are specifically required of all students at that college/university are qualified expenses.</p>
<p>The various credits or deductions are capped in size.</p>
<p>If the amount of net tuition you paid (tuition - free money) is greater than $4K, you really won’t need to give the accountant anything other than the 1098T, because all those other qualified expenses won’t make any difference.</p>
<p>If you get a 1099-Q from a 529, and only used the money withdrawn for qualified expenses there is nothing that needs to be done tax-wise.</p>
<p>For merit or need based scholarship/grant money and how it figures into taxes, see this thread: </p>
<p><a href=“http://talk.collegeconfidential.com/financial-aid-scholarships/1280595-1098-t-aoc-tax-credit-questions.html[/url]”>http://talk.collegeconfidential.com/financial-aid-scholarships/1280595-1098-t-aoc-tax-credit-questions.html</a></p>
<p>Your tax accountant should know that there is interplay between tax credits for the parents and the student’s taxes, and they need to figure out which is to your overall advantage.</p>