<p>The 1098T doesn’t tell you how much of the scholarship is taxable. It should have total scholarships/grants in box 5 and either box 1 or 2 showing the amount of qualified education expenses paid to or billed by the school. You subtract that amount from box 5 and also subtract required books and supplies to get the taxable amount.</p>
<p>If the full year scholarship was credited in 2012 but you paid some qualified expenses in 2013 or box 1 or 2 doesn’t have spring expenses, only count the fall part of the scholarship for 2012. Report the spring part of the scholarship in 2013.</p>
<p>Remember that even if a student doesn’t meet the threshold for filing federal taxes, he or she still might need to file/pay state taxes. I know in our state the personal exemption/deduction is MUCH lower than the federal one.</p>
<p>Advicemom, was your DD’s room and board cost for the fall semester alone over $8K? Did the accountant ask and subtract out books and other supplies as well as all fees from the total amount of award? You can’t just look at what the school actually charges, but you need to go through the breakdowns. Essentially what should be done is the exact amount that was received in 2012 should be reduced by tuition and fees, books and supplies to courses, to get the exact amount. $16-17K sounds awfully high for room and board at a college.</p>
<p>Good point. In my state scholarships/grants are considered unearned income so yes, the threshold for filing and the standard deduction are lower.</p>
<p>Did not know the Pell was ever taxable. Learn something new all the time. I think, though, if I had to tell my CPA how to get me the best deductions, I’d be looking for a new accountant!</p>
<p>Thanks annoying dad. The 10,000 is what is left after subtracting box 2 from box 5. Accept for books, which she bought used, there were no qualifying expenses.</p>
<p>Irs Pub 970, look at scholarships.
Separate from that are any 1098T issues, with their own instructions.
(Also need to verify whether the 1098T amounts are for the calendar year or academic year, since the school has either option.)</p>
<p>I wasn’t clear but what I meant was did you pay winter expenses in December 2012? What do you mean by counted the expenses for 2012? Used them for the AOC or reported the 1/1/13 aid as taxable in 2012 after subtracting expenses? </p>
<p>Pub 970 is clear that what counts is when expenses are paid. It gives no guidance on when to count scholarships/grants in cases such as yours. If you used winter expenses from 2012 for the AOC and didn’t offset it with the aid from 1/1/13, you would be getting an ‘early’ benefit for 2012. In the case where there is enough aid to be taxable, reporting the 1/1/13 scholarship for tax year 2013 means you can’t reduce it by the corresponding expenses, again because the one thing Pub 970 is clear about is that it matters when expenses are paid. It’s kind of a black hole. If you reported the 1/1/13 scholarship as taxable for 2012 after subtracting expenses paid in 2012 the worst you did IMHO is report the scholarship early, which is better than late, and were able to offset it with the proper expenses.</p>
<p>Thank you annoyingdad. What I meant was, I used whatever expenses I paid in 2012 towards winter term in the tax calculation. Only thing I used from 2013 was the aid, which means I reported aid early. I am good then. Thanks.</p>