How to reflect expenses/scholarships on student's tax return?

I am trying to file my son’s tax return and am not sure about the scholarships/expenses. It’s easy to calculate the amount from Fall 2020, but stuff for Spring semester often gets posted in December so do I use Spring 2020 which was posted in December 2019 or Spring 2021 which was posted in December 2020?

He has to file taxes because his summer job on a farm issues him a 1099-NEC and he also helped his father put up a fence for the county school system and they issued him a 1099-NEC as well. Obviously he will have to pay self-employment taxes. He also has a W-2 from his work-study job and a 1098-T. I know that I have read that sometimes the 1098-T is not correct so I wanted to calculate it myself to make sure it is correct.

I believe tuition, fees, and books are qualified expenses. What about fees to submit his application for the nursing program and the fee to take the HESI for admission to nursing? Also, is the CARES act relief refund considered a scholarship or something that has to be reported?

Here is the IRS page on scholarships:

Here is the IRS page on various COVID-19-related relief payments and credits:

@kelsmom or @BelknapPoint will correct me if I’m wrong…but I don’t believe the fees for applying to nursing programs are considered fees for the purpose of qualified educational expenses.

The school issues the 1098 with the tuition/fees/scholarships in the year the school posted them. You don’t have to consider it the same way. I always kept all the tuition and scholarships in the year they were used (so the 1098 was never correct). It was easy to to using the school bill.

You don’t enter the tuition and fees and scholarships on the tax form. You do all the calculations on your own and then enter the amount of taxable scholarships on the income line (it used to be line 7 but I don’t know anymore) with a notation beside it (Schol…$5000). If you are using a tax program like turbo tax, it will ask you if you received a 1098, you say yes, it will ask you if it is correct, you say no, and then it will give prompts for the amounts you paid for tuition and fees, for books, and the total amount of scholarships. It takes some wiggling around to get the right numbers.

The only fees allowed to be included are those required by the school for things allowed. If the school just has one big fee “Student fee” then you can use that, but if the school itemizes its fees on the bill, some things like transportation (buses around campus) aren’t allowed. Insurance is not allowed to be deducted. Sports fees may not be allowed. You have to look at the IRS guidelines.

My daughter had 5 things on her bill: Tuition, 2 student fees (not itemized), meal plan, insurance. We could only offset scholarships for the tuition and fees, not the meal plan or insurance. The bill then applied all her scholarships to each of the 5 charges, as some were only allowed for tuition, her athletic scholarship paid for the meals (so taxable), etc. I added them all up (without loans), subtracted the tuition, fees, and books from the scholarships and grants, and she paid taxes on the difference.

I did that for each semester, combined spring and fall, and did her taxes.

We often added some to her tax bill so that I could take the AOTC. Just increased the taxable scholarship amount.

Application fees and fees to take placement or professional licensing tests are not qualified expenses. Stimulus payments are generally not reported as income on tax returns, but there are a lot of different aspects to these payments. With all the questions you have asked here, I am going to strongly suggest that you seek trusted tax advice from a local professional, or at the very least use an online or software tax preparation program (Turbo Tax, H&R Block, etc.).

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