Another question I noticed on the Fafsa … I don’t remember this from last year… but was sons’s 1st year too… it wanted me to list all his scholarships and/ or grants… so I need to find the College paper listing all of these… and put them all in there… (anything given to him – for the full year - both semesters)??
For tax purposes…if I bought college son a chemistry book for over $300 on Amazon… is all I need the invoice for this for our Tax guy to deduct this ? I think that is something they ask for when we go to get our taxes done… I haven’t saved what I / he spent on college books unfortunately.
You may wish to familiarize yourself with IRS Publication 970:
Regarding income:
Looks like what would be used for FAFSA is the taxable gross and then the 401k contributions added in question 94a.
So you have 5 kids at home, son2, son3 and how many other kids under 17?
Why does your H have so much for taxes withheld? With 5 dependents and 3 under 17 you would get a lot of deductions and should get a child credit of $3,000. Do you get a big refund every year?
Regarding FAFSA:
you have a pretty low EFC and can use all the aid you can get. Filing FAFSA early would make it more likely that son2 and 3 get extra aid like SEOG and Perkins and Federal work study, because those are given out until gone.
It’s ok to estimate income for now. Was you H’s income pretty close to this year’s? Or use the taxable gross from 2015 paystub and enter 401k contributions (only H’s, not employer) in question 94a of FAFSA.
Put “will file” as tax return status.
Once you file your taxes and they are processed you can sign in to FAFSA and correct it to “filed” and use IRS data retrieval tool.
For your son’s scholarships to enter on FAFSA. It asks for amount of taxable scholarships included in AGI. That means what he reports on his tax return.
Your son should get a 1098T form from his college and it should list billed costs and scholarships/grants for the year.
When were his bills due/paid for fall’15 and spring’16?
Taxable amount of scholarships/grants is the amount that exceeds tuition, fees, books.
Geneva tuition $25,450 (plus any other course/student fees) and books, what does that add up to?
Then add up Geneva scholarship & grants, Pell, SEOG, state grant what does that add up to?
Regarding AOTC:
The AOTC is an education credit where you can claim up to $4,000 of QEE (qualified education expenses: tuition, required fees, books, reduced by scholarships) and can get a tax credit of up to $2,500, 40% or up to $1,000 is refundable.
If you only end up with only about $500 in QEE then you could elect to have son2 include $3,500 of scholarship/grant as taxable income on his tax return and then you as parents can claim the $4,000 QEE on your tax return.
I know this is a lot to take in.
I would pay the house insurance and son’s remaining school costs, books and then do FAFSA.
Yes, I think a receipt printed out from Amazon with date, amount, name of book should suffice to keep for your records, or give to accountant.
So for accountant I think you you need W2, any other 1099 forms (for interest, dividends, etc), 1098T for son2, printout of billing statement from college for both semesters, book receipts.
Yes, you need to learn about the tax benefits and if your son will owe taxes on his scholarships (if I recall, he had quite a bit, including some room and board). See publication 970
The IRS data retrieval doesn’t fill in FAFSA, only the tax info. You do not have to wait to file FAFSA until your taxes are done. You can choose “will file” and then when you do file, you’ll be able to use the DRT.
I just called Fafsa and learned I can do all that estimating now… then go back in in Mid Feb when taxes are done…when it came to listing those scholarships, she said that’s only if they are for the upcoming 2016-17 year… (which his college’s list was for this year 2015 -16)… so it didn’t sound like I needed to list them ?? She seemed to agree with me… why do they ask these things if they know all about them anyway?
So everyone pays taxes LATER on the grants they get… dumb question. of course!
I tried to get her to say the penalty over the $21,000 figure in assets, but she couldn’t give me it… I get more help on this forum over calling there. This stuff is far too much for me to read… Even if I read it … likely I wouldnt understand it… and still want clarification… I’d rather just pay someone to do it -if I feel I am going to screw it up… If I could pay one of you – I would !! Ha ha… Wish I knew you all in real life …
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So you have 5 kids at home, son2, son3 and how many other kids under 17?
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Why does your H have so much for taxes withheld? With 5 dependents and 3 under 17 you would get a lot of deductions and should get a child credit of $3,000. Do you get a big refund every year?>>>>
I don’t even know what he has on his W-2 to be honest. … with the growing # of kids… we just never changed it… Yes… the Refunds are like $6,000 - to $8,000 … Last years was lowest…at $4,800 or so… the Tax man said due to it being a year inbetween one son OUT of college and another going IN --that this year would be back to another big one…
We use a lot of that for garage sales (consignment shopping for clothes, etc) or small family outings throughout the year… for Many years. we socked that whole amount onto the mortgage… paying it off in half the time… I realize everyone feels its foolish to allow the Government to borrow your money like that - I guess we never cared…
(3) kids under 17 …yes
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It's ok to estimate income for now. Was you H's income pretty close to this year's? Or use the taxable gross from 2015 paystub and enter 401k contributions (only H's, not employer) in question 94a of FAFSA. Put "will file" as tax return status. Once you file your taxes and they are processed you can sign in to FAFSA and correct it to "filed" and use IRS data retrieval tool.>>>>>>
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Husband made more this year… I think last years was $65,000 … this years is $69,000 …(before they deduct the 401 K, the adjusted gross that is)
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If you only end up with only about $500 in QEE then you could elect to have son2 include $3,500 of scholarship/grant as taxable income on his tax return and then you as parents can claim the $4,000 QEE on your tax return.>>>>
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Oh my goodness … I am lost on all this… What is QEE … qualified education expenses??
Don’t worry. Just work with your estimates for now.
Then when the accountant goes over everything and prepares your tax return you will know AGI, income from work, 401k contributions (from W2), federal taxes paid, AOTC claimed, any scholarships included on son2’s tax return.
I don’t agree with the person you spoke. The scholarships and grants that your son2 received in year 2015 and if any were taxable (or you make them taxable so you can claim full AOTC), then he would include them on his 2015 tax return. But they would not be figured into his EFC, because FAFSA asks for them on this year’s FAFSA 2016-17(question 44d of student section).
You should do son2’s FAFSA first. Last year a PIN system was used and this year one parent and student needs a FSA ID. If your son2 took out loans he might have already signed up for that FSA ID (it changed in May).
If the parent that signed last year with PIN needs one of those FSA IDs, sign up for it before you submit FAFSA.
https://fsaid.ed.gov/npas/index.htm
When ready to do FAFSA choose “FAFSA renewal” for son2. Some of the info from last year should then be prefilled for you. Add the financial part and any changes.
Then when you are all done and submit, on the confirmation page there should be a link to the PHEAA page for state grant. Also there should be a link somewhere to do another FAFSA for another child.
Then some info from parent should be there on FAFSA for son3 already.
Then add same parent financial info. If student had no work income and there won’t be scholarship income for him yet then just add his assets.
As others stated you can use estimates for income now (check the will file box) and correct later when the tax return have been file. However, the asset information is as of the day you file and should be accurate. You do not update the asset information when you correct the income information.
The AOTC (American Opportunity Tax Credit) can get tricky when scholarships are involved. The tax publication 970 does a decent job explaining most of it but not all of it. You will need to calculated the tax impact to your son of any additional income due to declaring an additional part of the scholarship as taxable in order to claim the the AOTC and also the impact that the additional income will have on your healthcare subsidy if you have one. There are many good post here that explain a lot of this.
Yes, QEE is qualified education expenses. It will be explained better in that Publication 970 that Madison linked.
Basically tuition, required fees and books.
Your accountant should know what to do. Give them son2’s billing statements from Geneva for Fall 15 and Spring 16 and his 1098T. Tell them you want to maximize AOTC (American Opportunity Tax Credit) and minimize taxable scholarship son2 reports. So it benefits you most.
For illustration purposes an example: (anyone correct me if this is wrong, this is my understanding):
Total scholarships and grants $24,625
(Geneva scholarships $11,000
Geneva grant $7,000
Pell $2225
SEOG $800
PA grant $3600)
- Geneva tuition $25,000
= -$375
In that scenario son2 would have $0 to report for taxable scholarships since tuition exceeds scholarships and grants by $375. (Actual numbers you would find on Geneva’s billing statements for son2)
But you also would have only $375 of QEE to claim for AOTC.
If you wanted to claim full $4000 of QEE to get up to $2,500 AOTC (up to $1,000 refundable), then you could elect to have Pell and part of PA grant totaling $3,625 reported as taxable scholarship income for son2 (Pell and PA grant can be used for room and board as far as I know, freeing up more money you paid towards tuition).
The $300 book expense (or more if you have receipts) can be used for QEE as well, or extra fees son2 paid that were not included in tuition. Depending on that amount you can then reduce the taxable scholarship amount.
I don’t know if that makes sense.
Regarding the big tax refund. It’s nice, but if you would benefit from having more money every paycheck during the year it might be worth looking into to change your W4. here is a handy tool
https://apps.irs.gov/app/withholdingcalculator/
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I don't agree with the person you spoke. The scholarships and grants that your son2 received in year 2015 and if any were taxable (or you make them taxable so you can claim full AOTC), then he would include them on his 2015 tax return. But they would not be figured into his EFC, because FAFSA asks for them on this year's FAFSA 2016-17(question 44d of student section).>>>>>
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I just finished them both… you are right… I remembered the question (about scholarships/ grants) but didn’t have it in front of me. but Yes. it said 2015! I didn’t answer it though… I was figuring I can go back & correct it later…
What does AOTC mean?? (I need a college forum abbreviation list I guess)…is there some sort of choice to make this taxable or what… again… I am sooooooooo LOST … and have no idea what to do with this stuff…I think I am going to drive the tax man crazy when I see him… ! What are the options… … I want whatever will lost less in the long run …
as for the FSA ID. …I was ahead of the game… did this months ago… for all 3 of us… though I got the lower case, upper case wrong -having to go in & change a password…to use the thing in the middle of trying to do a fafsa… I much prefer the 4 digit pin above this method… now it seems you need to know the email address. a password & the the ID… what a P I T kisser…(my abbreviation for the day)
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As others stated you can use estimates for income now (check the will file box) and correct later when the tax return have been file. However, the asset information is as of the day you file and should be accurate. You do not update the asset information when you correct the income information.>>>>
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Well I screwed that up then. because I guessed. I didn’t think it was a big deal since I was going to update it anyway… I did a rounded figure in stead of calling the Creidt Union, seeing what the CD was worth -adding checking account figure down to the dallor. … etc
What should I do now ?? Do they ever check this… will I get into some trouble for estimating THIS -just like the other stuff ?
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The AOTC (American Opportunity Tax Credit) can get tricky when scholarships are involved. The tax publication 970 does a decent job explaining most of it but not all of it. You will need to calculated the tax impact to your son of any additional income due to declaring an additional part of the scholarship as taxable in order to claim the the AOTC and also the impact that the additional income will have on your healthcare subsidy if you have one. There are many good post here that explain a lot of this.>>>..
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this sounds like a foreign language to me… Health subsity. what is that ??? Husband pays X amount a month for family plan… we all need to meet deductibles… outside of this… we don’t have any _______ or health savings … thankfully we’re a pretty healthy bunch… knock on wood… I pay more in orthodontist payments over anything …
Looking at last years Taxes… we have a Child Tax credit Schedule 8812
Credit for qualified Retirement Savings Contributions 8880
that’s about it. really… ours are pretty straight forward & easy… I should do them myself… but don’t want the hassel… I used to , and was always calling the IRS for clarification cause I couldn’t understand what I was reading…
Question… Who should take advantage of this AOTC thing ??
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Your accountant should know what to do. Give them son2's billing statements from Geneva for Fall 15 and Spring 16 and his 1098T. Tell them you want to maximize AOTC (American Opportunity Tax Credit) and minimize taxable scholarship son2 reports. So it benefits you most.>>>>>>
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THank you for this. I will make sure I have copies of these when I take my taxes… still waiting for this 1098-T in the mail. (I do have a note about this one listed on every years tax envelope )…
It was said “So it benefits YOU MOST”…
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If you wanted to claim full $4000 of QEE to get up to $2,500 AOTC (up to $1,000 refundable), then you could elect to have Pell and part of PA grant totaling $3,625 reported as taxable scholarship income for son2 (Pell and PA grant can be used for room and board as far as I know, freeing up more money you paid towards tuition).>>>>.
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Hmmmm I can’t say we really need any help with any of these things… at least not if This college (Geneva) gives them another package like last year … very thankful indeed… though 2nd son’s grades -if he doesnt get them up some (this one had a BAD breakup weeks before College, we were worried about him for a while there. thought he’d need counseling but he refused… )… anyway… I feel with all that Drama… some depression. he wasn’t doing his Best… so it will probably cost us an additional $3,000 -that he will loose due to his grades not being over a 3.0 (unless he makes it up this semester)… he had all A’s / B’s and (2) C’s… one of those C’s was a religious class …he’s not happy about that.
AOTC is a tax credit, like the Child credit you have claimed iN pRio years. It is not additional money from the school.
You need to read, and reread, Pub 970. Or make sure your tax man knows about it. If your son earned any money in 2015, is he having his taxes done by the same guy? The student’s taxes and the parents have to be coordinated to get the credit. It may increase his taxes a little, but you’ll get up to $2500 in taxcredits. Money in your pocket.
Okay, it sounds like you family has health insurance provided by your husband employer. Forget everything I said about healthcare subsidies (Obamacare).
Concerning the AOTC. It is one of several possible tax saving available for taxpayers with educational expenses. Everyone with educational expenses should consider if the AOTC would benefit them. For most people, the AOTC will save the most in taxes. Your accountant will need to know what your educational expenses were and WHEN they were paid. This along with the 1089T from the school should allow him to determine the best tax benefit. The 1089T alone might not be enough because a lot depends on WHEN you paid the bills.
Keep in mind that the tax accountant will need to know about your son taxes in order to determine the best outcome for both parties. Sometimes, you can actually pay more net taxes by taken the full AOTC.
FYI, not all schools mail a physical copy of the 1089-T. Some schools will have that document on the student’s online account.
OP- if you and the kids are not paying for textbooks with a credit card, start doing that ASAP. It will be so much easier to track with the credit card receipts/billing statements. You sound like a very frugal family (my hat is off to you!) but the convenience factor of having the record of textbook purchases makes sure that you’ve tracked every legitimate educational expense.