Ok… I just called & talked to a FAFSA representative… telling her I estimated our assets -thinking I can go back in there in Mid FEB to correct these things… I also mentioned how I didn’t check those boxes about 2nd son’s scholarships/ Grants … She told me that was fine… that I CAN go back and update these things… I let her know I was worried I messed this up… and she said …“you’re fine”…
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.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>>>>>
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we had a rough summer… vehicle issues… then the break up … son did NOT work … so he has no income to claim… all he did was volunteering for Carpenters Project and helped dad around here… so there is nothing to be coordinated…
I would think our Tax guys knows all of this… right ?? we go to a reputable place… that has a few workers… it is a very BUSY place …
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FYI, not all schools mail a physical copy of the 1089-T. Some schools will have that document on the student's online account.>>>>>
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Oh boy… something to call the college about ! Just got off the phone… I guess the 1089-T is ONLY on the website…yep- like you said… (but that’s if you have worked) …but the 1099-T will be mailed out…(probably cause this is more for the parents then?)… a little confusing… but good to know !
Before you see the accountant, read IRS Pub 970 so you will have a better foundation for discussing the options with your accountant. The rules are fairly straight forward but can take a while to digest. It will help you to better plan for the years ahead.
Yes, don’t worry. I know that the assets are to be reported as of the day the FAFSA is submitted. Get the statement from the CU on Monday and see what the difference is, if any. If you have to, find out how you can correct that if there was a mistake.
Your EFC will be primarily based on H’s income I believe, the amount you are over the asset protection amount will not impact EFC that much in my opinion, especially with 2 in college.
My D’s billing statements from her university list all grants and scholarships applied per term and what the charges were for tuition, room, meal plan, fees, etc. Her bills were due in Aug and Dec and we paid them then so we can count everything for 2015.
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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.
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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.>>>>>>
I don’t feel our Educational expenses were much at all… if you mean stuff outside of What college costs (set tuition, room/ board, meal plan, Books for class - what is REQUIRED)… 2nd son hasn’t really needed anything!!..
Everything he brought to college. he already owned… oh we got him a new laptop the summer before… . I think my biggest gripe was his buying a specific Bible required for a class that I could have got online for a fraction of what he paid in the college book store… (gotta make sure 3rd son doesn’t do that )… every little bit saved helps !
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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.>>>>>
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Yes we do !@# I like to earn $$ off those credit cards …though on the credit card statements… like when I have bought off amazon… it never says WHAT I bought… just the amount and amazon purchase… not so sure this helps much … but on their site. I can get the invoice for each… need to go DO just that… right now.
Also son has a list of his NEW books totaling about $350 for me to get buying… off I go.
Thank you all soooooooo much !! Such wonderful posters here – I am sorry for being so clueless…
So if you have son2’s billing statements and 1098T then that should be good for accountant to figure American Opportunity tax credit (AOTC) and any scholarships he has to report for taxable income.
I know that my D who is reporting about $4000 in taxable scholarships is paying way less tax on it than we get back in education tax credit. And I would guess the same is true for you.
With your family size and income and the child credit for 3 kids and such your tax bill should be very small.
Also if son2 did not work his standard deduction should cover the amount of taxable scholarships he would report as income on his return.
But the accountant can explain all that to you.
In fact, if OP’s situation is as she describes it (no reason to think it’s not), I would be surprised if the family owes any federal tax for 2015, with deductions, exemptions and eligible tax credits all taken into consideration. OP, if you get a full refund of all of your 2015 tax withholding, you should strongly consider filing a new W-4 for your husband that claims exemption from withholding for 2016. Take the extra take home pay that used to go to federal taxes each pay period and put it in a savings account that at least earns some interest, so that your family (instead of the government) benefits from holding the money.
My D rented a book from Amazon, she has the Amazon student prime account and gets 2 day free shipping. I had her sign in and print invoice for me. She kept receipts from bookstore for the others.
Nobody knows all this stuff right away. I was as clueless last year. I have been reading up on this and getting advice on here.
When you get your taxes done and they are processed you can go in and link the tax returns (if you end up filing for son2 because of scholarships) to the FAFSA with IRS data retrieval tool. That should help.
Although you have to make sure the 401k contributions are listed in parent section as untaxed income in question 94a since they don’t show up on tax return. https://fafsa.ed.gov/fotw1516/help/faadef23.htm
And then when son2’s taxes are done you will know what to put in student section question 44d (if anything) for taxable scholarships and grants reported as part of student’s AGI=Adjusted Gross Income.
You did have education expenses. Son2 took out $6,500 in loans and you paid another $3000 out of pocket, correct?
That’s $9,500 or more. But if these expenses are for room and board then they are not QEE and can’t be claimed for AOTC.
But if they paid for tuition, fees and books then they could be QEE and you could get the AOTC.
That’s what we are saying, that the accountant will hopefully know how to maximize all of this to your best benefit.
But it’s also good if you know about it so you can advocate for your family’s best tax outcome.
One other thing to be aware of. You can only declare scholarships taxable (for the purpose of the AOTC) if the terms of the scholarships allow it to used for other (non tuition) expenses.
Again I doubt this applies but it could to others reading this thread.
I don’t think this is correct. The IRS position is that the scholarship must be used in a manner consistent with its terms. If the scholarship terms don’t say that it can only be used for tuition expenses and don’t say that it can’t be used for non-tuition expenses, I think that you can declare all or part of it taxable in order to take full advantage of the AOTC.
As far as I know Pell can be used for room and board and PHEAA grant as well. So all other scholarships can be applied to tuition and also amount paid can pay for rest of tuition and fees, books.
For example if son2 gets $18,000 in grants and scholarships from Geneva and $6,000 in Pell, SEOG and PHEAA grants totaling $24,000 and tuition and books was $25,300.
Then you could claim $1,300 for AOTC
But if $2,700 of the PHEAA grant was allocated not to tuition and fees but to room and board instead it could be reported as taxable income to son2 and then the parents should be able to claim $4,000 for AOTC, correct?
http://federalstudentaid.ed.gov/opportunity/questions.html
see question 6
You are still not understanding taxable scholarships and the AOTC. If your son received scholarship or grant money (not loan money) for room and board, it may be taxable to him. For one semester, it probably is within the $6300 personal exemption, but he can’t just guess at that. If you and he agree, you might be able to get the AOTC of $2500 (and that bible can be considered a Qualified Educational Expense but the room and board, dorm supplies, etc. can’t be) even if you didn’t pay any amount out of pocket. It’s explained in Pub 970.
Say his tuition/fees/books were $10000 and his R&B was $5000 for one semester (fall 2015). If he got a $15000 scholarship, $5000 of that would be taxable scholarship to your son. If this is his only earnings, he is within the personal tax exemption and he likely will have no tax liability. However, you’d get no AOTC because all the tuition/fees/books were covered by scholarship. If you CHOOSE to do so, he could claim $9000 in taxable income, use his personal exemption of $6300, and pay taxes on $2700. You’d get a $2500 credit on your taxes (if you owe that much in tax, but $1000 is available to you even if you owe nothing).
That’s why taxes need to be coordinated.
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Although you have to make sure the 401k contributions are listed in parent section as untaxed income in question 94a since they don't show up on tax return. >>>
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I seen that question too… but didn’t check it ! for all I knew those were asking if we received money from these retirement accounts… I get very confused on this stuff… I dont’ remember checking this last year — what happens when we don’t check all we should be checking… I am sure many parents don’t do this right !!
I don’t know… many of those questions, including 94a, are pretty explicit about what they are asking for and where to find the information.
Also at some point, some of the student’s income could be subject to the kiddie tax (unearned income taxed at the parent’s rate). Doubt it applies to you but others have had that issue.
I’m sure others can post the IRS form to look at.
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When you get your taxes done and they are processed you can go in and link the tax returns (if you end up filing for son2 because of scholarships) to the FAFSA with IRS data retrieval tool. That should help.>>...
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This filing for son 2 getting scholarships … I never did anything like this or even heard of it for son 1…
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.And then when son2's taxes are done you will know what to put in student section question 44d (if anything) for taxable scholarships and grants reported as part of student's AGI=Adjusted Gross Income.
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You did have education expenses. Son2 took out $6,500 in loans and you paid another $3000 out of pocket, correct?
That’s $9,500 or more. But if these expenses are for room and board then they are not QEE and can’t be claimed for AOTC.>>>>>>.
the more this is talked about … the more I am going to screw it up… because I just plain DON’T UNDERSTAND IT … what the purpose is or how I am even benefiting from doing this… I would say the full $9,500 (loans, what we had to pay by check )…was purely for Paying college fees (tuition, board, food plan )… I can give our son $300 & did for his checking account - he can live on that easily for like 5 months… (but I do try to get all his books… he bought a few himself though)… When I see some of these estimates that our kids need for college outside of what is provided… I always thought those were horribly inflated. He doesn’t even have a cell phone… College has internet… his amazon fire phone (without service) works just fine for all internet activity, even calling me - with no bill… just saying … there is very little expenses… if he lives within what he has there…
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But if they paid for tuition, fees and books then they could be QEE and you could get the AOTC>>>>
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Without his working at all… it was ALL ON US… the parents… so that cancels that out… the more I am saying… the less it seems we would be able to take advantage of this AOTC… am I right ??