<p>No. Absolutely not correct. Loans are not expenses. Loans are loans. A loans is not ever an expense, qualified or otherwise.</p>
<p>If he paid for qualified education expenses with the loans, then those expenses are qualified expenses. Any expenses that were paid for with the loans but are not qualified eduction expenses are still not qualified expenses.</p>
<p>For instance suppose he had $5000 in loans and used $3000 of the loan to pay tuition and fees, and $2000 of the loan to pay for room and board. The $3000 tuition and fees is a qualified education expense. The $2000 room and board is not a qualified education expense. </p>
<p>You need to look at the nature of the expense to see if it is a qualified education expense.</p>
<p>Oops, sorry for not being clear. The loans went directly to the college and the college’s statement does not in any way allocate whether they went to tuition or room and board. But when I do the math of what our qualified education expenses are and look at the $2,075 in loans received, it seems the loans can easily be applied toward tuition expense and not toward room and board, for example.</p>
<p>I’m used to looking in my check register or credit card statements to see what my expenses are and didn’t realize that the moneys the Perkins and Stafford loans provide to the college (that we will have to pay back eventually) can be counted for a deduction or a credit the year they are taken out as long as they are used for tuition or other qualified education expenses vs. the years they are paid off.</p>
<p>A little bit off topic, I know…but mentioned above…
In 2010, our DS turned 24 years old, is a ft grad student and earned a few thousand in income. We paid his rent and provided >half his support. Can we claim him as dependent on federal return?</p>
<p>I’ll be turbotaxing soon and will obviously have to figure it out!</p>
<p>Won’t Turbotax run you through the questions so that you can see whether you could claim his as a dependent? He doesn’t seem to be a “qualifying child” (he’s aged out), but could still be a “qualifying relative.”</p>
<p>Yes, at 24 (by the end of 2010) he cannot be claimed as a qualifying child. </p>
<p>I think the qualifying relative is a bit harder to qualify for though. A child can be a dependent if they have not provided >50% of their own support. But a qualifying relative must also pass the gross income test, which is basically that their gross income can’t exceed the personal exemption, which is only $3650.</p>
<p>Annoyingdad, yes, I told my dad about this and he’s going to help me. I don’t remember anything about a W-4, they may have had a strange electronic version though that I didn’t have to actually read. I think I may have to pay a small amount of tax (my scholarship combined with work-study plus I just remembered I worked at a grocery store three months into the beginning of 2010 - gotta get a W-2 from them) but I don’t think I’ll have to pay much so it will probably be more affordable than I thought.</p>
<p>Too bad I didn’t keep my book receipts though - I didn’t know I needed to. Oh well, I’ll save them from now on.</p>
<p>How did you pay for the books? If you put them on a credit card or paid by check or charged them to your bursars account you should be able to track down the information.</p>
<p>Or you can get a usable estimate of your book expenses by listing out the books you bought and checking the bookstore for the prices of those books. You may well need the actual receipts if you are audited, but your audit risk will be low.</p>
<p>Thanks for the help with the DS question.
Yes, TT will help me figure it out…I was hoping to be mentally prepared ahead of time for the bad news that we probably can’t claim him.
I will check out his income to see if the qualifying relative might fit.
Thanks for the info to put me on the right track!</p>
<p>If you pay for books from Amazon, the records of your purchases also are kept. I pulled those records last year when we were working on our taxes. My son also got a 1098 from his school – he has a scholarship for full tuition and his room.</p>
<p>I just want to make sure I understand tax consequences.</p>
<p>I will give an hypothetical situation and want to validate that is correct.</p>
<p>Tuition is say $25,000 and Student gets say $10,000 in scholarships and grants. The remaining is paid for by the parents, plus room board etc. Student had a summer job that earned him $2500 and taxes were withheld by employer. The student is claimed as a dependent by the parents as he is a full time student.</p>
<p>So what is the students income for 2010?
Is it $2500 that he earned in 2010 for wages?
Is it $12500 ($10,000 +$2500) that he got in 2010 as the parents paid for remaining portion of the fees and the student really paid nothing.</p>
<p>My understanding is that as tuition is greater than the scholarship, the only income that counts is the $2500, on which he may get a refund as he would not really have a tax liability. Is my understanding correct?</p>
<p>My understanding is that if the above tests are met, a child over 24 can be a dependent relative. However, I think that that child cannot be used to qualify a parent as head of household. As for books, my understanding is that only books that have to be purchased from the student’s school can be deducted whereas books available from an-off campus store or available online can’t be deducted. “Availablity” would seem to be the test and that it doesn’t matter where the student actually purchased them. I could certainly be wrong. Another question: Can medical boards and the books used to study for them be deducted? I suspect that if the student is still in medical school, neither is deductible, but that specialty boards and materials can be deducted. Anyone know for sure?</p>
<p>I have changed my mind about head of household ^. After looking at a tax program, I think that a child who is a qualifying relative could be used to qualify for head of household. And I could still be wrong!</p>
<p>No. Not all taxable income can be used to fund an IRA. Only money from wages, salaries etc in return for services to an employee, some self employment income, and some other exceptions like money from a divorce.</p>
<p>We found out about 1098T last year AFTER we filed our return - when our daughter was a freshman. after talking to the IRS we made the adjustment on OUR return to add the taxable portion of our daughter’s scholarships to our income. they did not tell us that she had to report that income. we are in the process of filing for this year and questioning it again. for 2009 she did not work and would only have had the taxable scholarship which was under $2000. this year for 2010 it’s about $4000 in taxable scholarship and with her summer job she will be over the $5700. we are claiming her on our return and taking the educ tax credit. but does SHE need to file a return and claim that scholarship income??</p>