First, try to locate your school’s 1098-T Details Statement, or whatever your son’s school calls it. I’ve dealt with 1098-T’s with 4 different universities. All of them had a way to pull up the Statement of Details or what have you. Three of them provided this statement via the parent’s access to the student’s account in the form of a printable document. This statement will tell you what and when your son was awarded the S&G amounts and what and when he was billed for various amounts. This has always been helpful to me at tax time.
Then, for the simplest answer to your question: Take your kid’s S&G amount from the 1098-T; subtract the amount billed in 2014 in Box 2 (as long as you haven’t reported any of that amount before–did he have a 2013 1098-T, and was Box 7 checked on it?); ensure that the amount in Box 2 is accurate – is that really what he paid in tuition and fees in 2014?-- you get to use the actual numbers, not what they put on the 1098; subtract the cost of all books and supplies; and THAT amount (S&G minus tuition&fees minus books&supplies) is the amount of taxable scholarships that will go on the Wages line of his 1040.
If he has any savings account interest or any dividends, add those to the amount you calculated above.
Given what you said – fairly simple tax situation for your son – that total should be his AGI, or at least a very good estimate of it. Taxable scholarships (calculated above) plus dividends and interest reported to the IRS.
And then, yes, the amount of S&G reported in that AGI (line 44d on the FAFSA) will be the same amount you calculated for the Wages line if his 1040 (above). My son had something like $27 in interest reported to the IRS by his credit union. His line 44d on the FAFSA was his taxable scholarship amount, period (like your son’s), or another way of saying it – it was his AGI minus the $27 interest he reported on the 1040.
What if the school gives you a full tuition merit scholarship? They don’t call it just a merit scholarship. It covers the tuition for 4 years, even if it rises. So I don’t think it can be used for room and board.
I just wished that room and board would be a qualifying education expense for AOTC. What if certain majors or even 4 year programs are not available at the school close enough to commute to?
@mommdc, even if it’s called a “full tuition scholarship,” you can still use it for whatever you want as long as it is not specifically stipulated that “this is for tuition only.” Most of the schools that I’m familiar with would apply the value of a full tuition scholarship against the billed amounts in the student’s account. So, if the student were billed for room, board, tuition, and fees, (and maybe even books if the student were able to charge books to the student account), the value of the full tuition scholarship would then be applied to the bill, decreasing the student’s balance, and the student or the parent would then be responsible for paying the remaining balance. Who’s to say which expenses were ultimately paid for with which monies? Unless your student’s scholarship stipulates that it is only to be used towards tuition and fees, you are permitted to be creative with which funds pay for which expenses when you do your taxes. Whatever lowers your tax bill the most, within the confines of the rules, is fair game.
Oh, wait. @mommdc I’m so sorry. What I said is true. BUT, that full-tuition son has been out of school for a while, and it suddenly occurred to me that the wording on the IRS instructions could be such that you have to subtract the cost of tuition and fees from scholarship amounts first, or what have you, such that you can’t get the credits. I mean, programs like Turbo Tax can walk you through that stuff. But barring specific wording requiring you to subtract out tuition and fees first, you may have a chance. I’m sorry! I temporarily forgot how much they’ve buckled down on scholarships in the past few years. My current college kids are full-tuition-plus, which is nothing to complain about, but we have had to pay a heck of a lot of taxes on that money! Sorry if I jumped the gun … don’t know if I have or not … several years ago, that’s how it worked.
It’s ok. We will see what we are facing next year around this time.
Fees and books could very well be $2,000 and we would at least get a partial credit.
I am planning to pay the semester bills in July and December to take maximum credit I can.
I got a response from the school. They declined to give me a direct answer as they are not allowed to give tax advise. However, they said the scholarships will be applied to tuition first. It can be used on non tuition and fee if exceeded the T&F amount. That’s probably why they don’t issue us the 1098T. I think my only hope is to use the grant on R&B to leave some T&F on our contribution.
Next year would be easier as the textbooks would be much more expensive and 2 small e,ternal scholatships are non renwable.
