Box 2 has the entire amount for the school year. Box 7 has check mark; Check this box if the
amount in box 1 or 2 includes amounts for an academic period beginning January 2015.
Yes, but you didn’t pay the spring expenses in 2014. That’s what matters for the AOTC. Do you have less than $4000 in QEE that you paid in 2014?
ETA: The 1098T is an advisory document to make people aware they may have expenses to claim education credits. You need to go by your own records of bills and payments to determine how much you paid in 2014.
Thank you all for your help especially annoying Dad. So here is what I gather. Since my only source of income is through work study and that too the amount earned is less than 700 bucks. The student will file tax return as single unless this can be included with parents to keep taxes simple. Parents will claim student as dependent, and take AOC tax credit. Does this sound correct? I have $4000 in qualified expenses for the semester so it shouldn’t matter in any which way.
Again, as per the posts on the first page, only investment income can ever be included on a parent’s return. Work study is not investment income, it’s income from work. I gave you a link earlier to IRS Pub 501. Did you look at it? If your only income is $700 from work, you don’t have to file a return. You would want to file one if any tax was withheld so you could get a refund of that. But you should have claimed exempt from withholding on your W-4 and at that low income no withholding should have occurred anyway.
Yes, only parent’s can claim the AOC for a dependent, they will also benefit from your exemption.
^^ If your only income is $700 from work, you don’t have to file a return^^
I thought if have any earned income, uncle Sam would want piece of the pie? For single the gross income requirement for filing is 10,000, does that mean you don’t have to pay taxes if the income is upto $10K?
The $10k is for a single that can’t be claimed as a dependent on someone else’s return, i.e. your parents. For someone who can be claimed as a dependent on someone else’s return, the filing threshold is $6200 if all income is earned income. I referred you to the table on page 4 of Pub 501 for that reason.
Your filing requirement as a dependent on someone else’s return (parents) is lower than $10,000. Last year it was $6100. You need to add up all your income, scholarships, interest and figure it out if you need to file. You CAN file anyway, just to have a return if someone asks for one. I find it easier to submit a tax form, even if there were no taxes owed, than to have to produce all the documents if you need to verify for FAFSA or something else.
Not quite. Just Taxable scholarships! Not all scholarships. Follow the Table 2.2014 Filing Requirements for Dependents in Pub 501 (annoyingdad mentioned it several times)
@4kidsdad
My husband does our taxes and started reading about taxes and scholarships last yr. (we didn’t have to worry about it last yr. This is the first yr filing will need to include them.) I thought I understood from last yr’s posts that scholarships were being considered unearned income and taxed at the parental rate. But the part you quoted above sounds like they are considered earned income. Does that mean that they are considered income but at the student rate?
(I am really glad that he is the one that does the taxes!)
They are considered earned income for the purpose of being required to file a return and the standard deduction. They are considered unearned income for the purpose of having to pay the kiddie tax(form 8615).
^The taxable scholarships could be earned income or unearned income.
The taxable scholarships are earned income in the Table 2.2014 (Filing Requirements for Dependents) of Pub 501. Also, in the “Standard Deduction for Dependents” of Pub 501
HOWEVER, the taxable scholarships (w/o W-2) are unearned income in the Form 8615.
I’ll show him both of your posts. Thank you. I still don’t understand, but hopefully he will.
I’m confused with last several posts. My understanding is as long as scholarship doesn’t exceed tuition then it is not taxable. There is one post that talks about even if not all scholarships are taxable, for the purpose of filing it is an earned income and you(student) still need to file taxes if the amount exceeded $6100.
As I said, my only income is 700 bucks from the work. Scholarship & grants ($10,000 for the semester) doesn’t exceed tuition. Do I have to file taxes if my parents are going to claim me as dependent? Do I have to add my earned income amount to their tax return? Sorry guy, it’s my first year and I want to get this right.
If you are referring to post #26, post #27 corrected that. Only the taxable amount, if any, the amount over QEE is earned or unearned income for the two purposes mentioned in previous posts.
Nothing has changed in regard to previous answers to the questions in your 2nd paragraph. Read posts #23 and #25 again.
Thanks for clearing that out. That means I won’t have to file return.
^^^For someone who can be claimed as a dependent on someone else’s return, the filing threshold is $6200 if all income is earned income.
The only reason you would file taxes is if you had taxes withheld from your work study if that is the only source of income. Correct? As I said, I have earned $750 from work study so as such I don’t need to file taxes, I’m going to be claimed as dependent. I don’t know how I can stop my employer from withholding taxes?
To avoid tax being withheld, you claim exempt when you fill out a W-4 when starting a job if you meet the qualifications for being exempt. Also, if your pay is low each pay period, like your work study job, it’s likely that the IRS withholding tables the employer uses won’t require that taxes be withheld even if you didn’t claim exempt.
Here’s the W-4, read about claiming exempt both in the instructions and on line 7 of the form:
OK, I just did D’s taxes on TurboTax. She earned roughly $2300 in work study at school in NY, and they withheld $90. She also worked at home in VA, earning about $350. She has $1500 in excess scholarship. The only tax withheld was the $90. TurboTax says she’ll get back the whole $90, but owes $21 to NY! I think it’s because the scholarship is actually counted as unearned.
Yeah, my son had that situation because our state considers taxable scholarships as unearned income so he didn’t get as large a standard deduction for state as earned income would have gotten him.
• Last year I had a right to a refund of all federal income tax withheld because I had no tax liability, and
• This year I expect a refund of all federal income tax withheld because I expect to have no tax liability.
If you meet both conditions, write “Exempt” here . . . . . . .
Isn’t there one more condition for “exempt”? I read somewhere like, you can not be claimed dependent by someone?