OK… so if I have this right, first child was done with college prior to 2014… second child didn’t start college until this academic year (2015-2016)… third child will start this coming fall (2016-2017 freshman year). If all that is correct, it makes sense that there were no education credits to claim in tax year 2014. But, for the 2015 tax year, make sure to ask your “tax guy” to consider education credits for your second child, to include the possibility of claiming some of his scholarships as taxable income in order to qualify for a full or partial American Opportunity Tax Credit.
Original question was how much aid would you lose if your unprotected assets are $4000. $4000 x 5.6%= $244. Your EFC MIGHT go up by $244.
Now we say ‘Great news! You might be entitled to $2500 as a tax credit’ and you’re worried that you are getting more than your fair share from the government? If you want the $244, why don’t you want the $2500? Same government paying/sharing with you.
But as I thought about it, you might not get the $2500, only $1000. If you have 6 or 7 people on your taxes (not sure if you still claim older son), and AGI is ~$60k, you may not owe any taxes, and if so then you’d only get $1000 of the AOTC, which is paid to you whether you owe anything or not. If you have:
AGI - $60,000
6x personal exempt - 24,000
standard deduction 12,600
total taxable income $23,400
Tax due on $23,400 is $2,606. If you have 3 Child credits for $3000, you don’t owe any taxes. You could STILL get $1000 from the AOTC if you/he paid at least $1000 of QEE - that’s tuition, fees, books. If you don’t have any amount spent on books/supplies, that number is $0 (don’t worry about it, it’s the total of all 3, tuition/fees/books). It sounds like you/he did have book expenses of $300 for one book and maybe $20 for the bible. Any other books?
If you want it, tell your tax man you want the AOTC. It is unlikely your son would owe any taxes as his scholarships do not exceed the QEE, but if they do, the amount is within the standard deduction of $6300. He’d have to pay tax on any scholarship that exceed the QEE even if you don’t take the AOTC, but it seems he is well within the $6300 standard deduction so wouldn’t OWE anything. Let the tax man worry about it.
[QUOTE=""]
OK... so if I have this right, **first child was done with college prior to 2014..... second child didn't start college until this academic year (2015-2016)... ..third child will start this coming fall (2016-2017 freshman year)**. If all that is correct, it makes sense that there were no education credits to claim in tax year 2014. But, for the 2015 tax year, make sure to ask your "tax guy" to consider education credits for your second child, to include the possibility of claiming some of his scholarships as taxable income in order to qualify for a full or partial American Opportunity Tax Credit.>>>>
[/QUOTE]
YES… you have this all correct !@#
[QUOTE=""]
Now we say 'Great news! You might be entitled to $2500 as a tax credit' and you're worried that you are getting more than your fair share from the government? If you want the $244, why don't you want the $2500? Same government paying/sharing with you.>>>>>
[/QUOTE]
Well I had no idea they had all this stuff… Before I asked… I had NO IDEA if this was going to be as high as %10- 15% … not a 5%… and with KNOWN bills coming up… I might as well sock it in there …that’s all.
What about 2013?
Post #79: You say he paid nothing and had extra money…FYI that makes no sense since you also say he has $20k loans to pay back.
[QUOTE=""]
But as I thought about it, you might not get the $2500, only $1000. If you have 6 or 7 people on your taxes (not sure if you still claim older son), and AGI is ~$60k, you may not owe any taxes, and if so then you'd only get $1000 of the AOTC, which is paid to you whether you owe anything or not. If you have:>>>>>
[/QUOTE]
We do not claim older son… he is 25 living in another town -on his own .
<<<< It sounds like you/he did have book expenses of $300 for one book and maybe $20 for the bible. Any other books?>>>
I told son this was his project today to get me all invoices…that he can find.
[QUOTE=""]
If you want it, tell your tax man you want the AOTC. It is unlikely your son would owe any taxes as his scholarships do not exceed the QEE, but if they do, the amount is within the standard deduction of $6300. He'd have to pay tax on any scholarship that exceed the QEE even if you don't take the AOTC, but it seems he is well within the $6300 standard deduction so wouldn't OWE anything. Let the tax man worry about it.>>>>>
[/QUOTE]
Sounds GOOD… I am printing out what you said here… a number of these posts … to take with me on TAX day !!
How can I thank you all !@@
@OverRunMama If you are having your taxes done by a reputable CPA, then don’t worry too much about what everyone is telling you here. It does get confusing.
Just make sure you have ALL information together when you see him. 1098T and all bills you paid for books, supplies,etc.
You can ask about the AOTC, but a good CPA will know to file for this.
You are worrying about this far more than necessary if you are having your taxes done professionally. When your taxes are filed, he should give you a copy of your tax return.
You can then go into FAFSA & redo your original estimates using this tax return & corrected numbers.
Yes… IF the “tax guy” is reputable and knows what he is doing, and if he knows that in many cases otherwise tax-free scholarship money can be declared taxable income in order to free up more QEE for the AOTC.
[QUOTE=""]
Post #79: You say he paid nothing and had extra money...FYI that makes no sense since you also say he has $20k loans to pay back.>>>>
[/QUOTE]
this is what I remember… I have no idea what our EFC was… I was expecting to get some bills for college… … but I didn’t get any… (that I remember anyway)… but I do remember him getting a check or 2 … and I was thinking… why are they sending this to him… this should be going towards his tuition… I don’t know… it was years ago… he did move into a cheaper apartment taking on the payments of all his roommates… even loosing $1,000 as 2 of them didnt end up paying him… then he was responsible to pay the Landlord… son was never late and he covered 2 of these kids… I was FURIOUS he put himself in this situation… but as he’d tell it. he was still saving money over paying college dorm prices…
Having never went to college - we had no idea what to expect… so I have no idea how to explain what happened there… but he most definitely had some $$ coming to him… I still dont’ get it… and would rather that NOT have happened. because yeah… he still had stuff to pay back… lots of it. why didnt; this go directly to THAT ?? you got me !@@
2013… didn’t look but pretty sure 1st son was out of college then too…
Even if son2 would include $4000 of taxable scholarships on his tax return to be able to claim AOTC then he would not owe any tax since he gets a $6300 standard deduction so no tax would be owed by him. In reality it will be less than that I expect.
For that matter I don’t think you will owe any tax either and will get all the tax withheld back plus refundable additional child tax credit (and AOTC if you claim it). So you could get a $10,000 refund.
Son1 did pay something. He took out $20,000 in loans. He probably took out more than the tuition amount and then got a refund check for the excess paid and then paid his rent off campus from that.
Son2 also paid something, $6,500 for Perkins and direct loan. And you paid another $3000 something.
So if you qualify for a credit claim it.
@twoinanddone, I was wondering about that but I think they will take the first $1500 of AOTC off the taxes of $2,000, then $500 of the child credit. Then additional child credit and $1,000 refundable part of AOTC will be added to refund.
Ok tried a tax estimator, maybe the refund won’t be quite $10k but it will be big, depending on how much federal tax was withheld from income. I estimated federal withholding to be $5,000 because OP mentioned total taxes was $13,000 and I figured about $8,000 for soc sec, medicare, state, local tax (11.65%)
Forecasted Refund $8,434.00
Filing Status MFJ
Dependents 5
Total Income $60,500.00
Adjustments $0.00
Deductions $12,600.00
Exemptions $28,000.00
Tax $2,066.00
Child Tax Credit $566.00
Education Credit $1,500.00
Withholdings and Estimated Payments $5,000.00
American Opportunity Credit $1,000.00
Additional Child Tax Credit $2,434.00
[QUOTE=""]
Son1 did pay something. He took out $20,000 in loans. He probably took out more than the tuition amount and then got a refund check for the excess paid and then paid his rent off campus from that.>>>>>
[/QUOTE]
Yes this is obviously what happened… We just applied for what he was eligible for…I just never expected it to be more than what was needed… I guess it was up to us to pay that back… if I didn’t want him to be using it… we did cover all his un-Subsidized loans… as soon as they came in…didn’t want the interest to start adding up .
MOMMDC… I am going to report back to you… to how close all of this is… in Mid FEB - I promise… husband just walked in from work… was telling him how amazing you all are… how you have this all figured out for us… yeah… we like those figures !@#
Good, I want to see how close I was, lol.
Believe me, I am waiting impatiently for our W2 so I can get our taxes done.
mommdc, not all child credit is refundable. Only the ‘additional child credit’ is, and It depends on the income and having more than 3 eligible children (have to be under 17, I’m not sure if OP’s minor children are all under 17) You have to run the forms to see if it is refundable or not. Also, if they’ve had $5000 of salary withheld, that’s just their money they are getting back in March rather than throughout the year as they earned it. They could have had $10,000 withheld, or $20,000. It has nothing to do with owing taxes or getting credits. The tax liability doesn’t change based on the withholding (unless there is a penalty for underwithholding).
You also gave her 7 personal exemptions, and she said they have 6 (4 children, 2 adults), about a $600 difference in tax owed ($2600 rather than $2066)
[QUOTE=""]
It depends on the income and having more than 3 eligible children (have to be under 17, I'm not sure if OP's minor children are all under 17) >>>>>>
[/QUOTE]
(3) youngest children are 14 …12…and 8 yrs old
[QUOTE=""]
You also gave her 7 personal exemptions, and she said they have 6 (4 children, 2 adults), about a $600 difference in tax owed ($2600 rather than $2066)>>>>>
[/QUOTE]
We are originally a family of 8 … oldest is on his own in another town…
so 7 is probably correct… (5 kids still at home) = 2 in college this fall & the 3 mentioned above …
I used the info OP gave about her family. She said there are 5 kids at home, two are going to be in college and three are under 17.
This is the output from an online tax estimator. I said it is based on estimates.
But it does seem to suggest that they could get the full $2500 in AOTC split in two parts, one reducing the tax liability, the other refundable, same with child credit and refundable additional child credit.
Of course they are only getting back what they had withheld plus the refundable portion of tax credits.