@oneundecided Mmm… I am lost why they report twice. You need to call them to understand. I spent good amount of time this morning to understand the forms they sent and the account statement lines. Pretty much now I am following except for 2 items.
Noticed there is a line item FAJH which is Falt Rate adjustment - Fees and OU 1098-T makes that as a credit $-633.75. Not able to understand what this item and why they make it as a credit in the fees section in 1098-T. It appears like this, total tuition is $9448.50 and total scholarship for tuition is $9448.50 and also there is a FAJH for $-633.75.
There is another fee FNUS Fees-Norman UG Semesterly for $126.50 but in 1098-T it is reported only for $52.50 but with a notes 'Yes'. So it looks like there is a specific reason why only $52.50 considered as a 'required' fees and the rest is not and hence we can not claim the difference in tax. At least this is small amount. But I am curious to understand the first item.
@oneundecided You are right. Looks like OK mandates state tax for non-residents if the income is $1000 or more. SO I presume we need to file OK state tax for the scholarship amount like $2.1k housing aid and any excess amount from other portion of the scholarship. Also I assume the $625 / semester check we get for National Merit Scholarship is OK income. But good news, OK tax rate is so low. For $3.5k income it comes to around $30 or so. That is good.
Fortunately in our case, my D does not have to file CA state tax since you need to have income around $16.5 to file. So she needs to file Federal and OK Non-Resident State tax only.
@GoldenRock@3scoutsmom – I just spoke with OU Foundation office (portions of the scholarship package come from there and they issue the 1099)-- they are aware of some issue w/ the 1099s issued and have mailed out corrected ones that should land in your box this week… so you may want to hold off on filing.
@oneundecided Thank you for making that call! This is confusing. I appreciate everyone’s efforts as we try to figure this out together. Fingers crossed we don’t have to file in OK!
Y’day we received the new 1099-Misc form with the explanation of the reason for the new form. But it is only for 1099-Misc, instead of putting the amount in box 3, they mistakenly put in box 7. But still to decipher 1098-T and Account statement is hard. I called and it went to some one voice box and left a message.
Today I spoke with some one in Bursar office. She informed the credit in the expense in 1098-T for FAJH for $-633.75 is whenever student takes more than 15 credits. In my D case, since she did 20 credits and since OU charges flat rate of 15 credits, the 5 credit flat fees is reported as credit to reduce your total expense. At this point per OU both the 1098-T and 1099-Misc forms are correct and final and we can file the tax returns.
Finally started to dig into the tax implications today. As @GoldenRock mentioned, our D owes less when not subjected to our tax rate via the “kiddie tax”. Even though we lose the deduction of claiming her as a dependent, it saves over half of her tax obligation. I do have a couple of questions, though, that I wonder if anyone has figured out:
I understand that we need to file OK state tax (along with home state tax for any earned income) because they earned more than $1000 in OK. Do we include the entire amount of their scholarships: the amount on the 1098-T and the 1099-MISC? Do we only pay tax on the scholarship portion that went to room and board? I think that is accurate, but it seems like that amount should be separated somehow on the form.
@WImom94 Here is my understanding so far and don’t consider this as tax advice.
The amount to report as income is $2100 housing scholarship. It is not considered educational expense.
The amount of $2000 for text books & computer. Here if you have expenses for books and if there is course which mandates computer and if you have bought computer then you can deduct books + computer and the remaining is taxable. For example in my D, she did not spend really any major money for books but got a computer for $500 and books may be $50-100; So $2000-500-100, $1400 will be reported as income.
In 1098-T, difference of expenses reported - (scholarship amount - minus $2100) is eligible expenses towards educational expenses. For example in my D 1098 (expense $13547, scholarship $14923 which includes $2100 housing scholarship. So around $680 or so amount valid educational expense not covered by scholarship can be used as real educational expenses.
So net $4100 ($2100+2000) as income and net $1280 ($500+100+$680) towards educational expense in her tax return.
But though student need to file tax return on their own for federal, they can not claim themselves for deduction if you have supported > 50% of their support and still you can claim deduction. Remember they are still considered living with you since their stay in college is considered temporary absence. That is a good news. In my D case, since she never worked in CA during summer etc, all that she will file federal and OK state (and CA state). But we will file our federal and CA state for me and my wife but will claim her deduction.
Hoping to file her return by March 4th using tax preparer and will let you know what and how they reported her tax.
Learning experience and not clear this year though I do my tax by my self in the past 30 years.
@GoldenRock! Thank you so much for your thoughtful response and the time you took to write it. Your explanations are incredibly helpful. I am most grateful!
