<p>I followed one useful link (posted here by a member) on a CPA's explanation of the 1098 and although it mentions that the1098 lists scholarships offered to the student by the institution, (which our college actually lists the ones processed by them, even if they did not give it), it clarifies later on that there is no consistent reporting method.
Our college 1098 states that they list what they processed and it clarifies what the tuition was in the Spring'08 and what it was in the fall'08, but the total in box2 is for Fall'08 and Spring'09. So, I can not use those amounts in my calculations. This form is not a good tool for my tax completion. We have a monthly payment plan that ends on 3/31/09 for the 2008-2009 year, It started in April'08. I can only count the amounts paid in 2008 for 2009 charges. We got some outside scholarships in 2007 that were used in 2008, but, again, it is my understanding that the income is counted when you receive it, not when you spent it, even though the college splits it across the semesters in different years, talk about complicating things!
And what about student loans? How are they counted as income and can that income be offset by some tax credit? If the parent takes a loan with the student as a co borrower, and the student makes payments, can the student claim the loan interest?
Honestly, I think that the IRS would not be too inclined in auditing these returns, because the scholarship/grant income is not going to match the college's account details. If I get a $600 scholarship in the fall of 2008 and give it to the college, I count all of it as taxable income (because of large grant) for 2008 but the college shows it as $300 paid in the fall and $300 paid in the Spring and if that bill needs to be satisfied by 1/2/09, it might apply the 300 in 2009. If I was a tax examiner, I would stay away from auditing these returns! 1098's don't match actual amounts, account details don't match actual amounts...etc
For tax purposes, Grants = scholarships, correct?
It irks me that the college lists the student activity fee in the tuition and related expenses box, if it is not claimable. TG it is the only fee they charge!
I am grateful to the members that take the time to give input and share their knowledge and experience here. Thank you to those that took the time to clarify about the books been an allowed expense. Why would anyone think that if it is bought in ebay, it can not be claimed? The IRS is a petty pain in the butt, but even they would no go that far!</p>