<p>NewEnglandMom, thanks for your input. It makes me feel better. I remember seeing a post on this financial section complaining that the 2011 IRS 970 was still not available. I went back to it to find when this version was available. According to the IRS page, I believe it was posted by the IRS on March 28, 2012. Not fair to all those who file before then if anything was changed.</p>
<p>So the books and supplies eligibility has been taken away. Hmm. Well, as I said from the beginning of my posts on this thread, this is not something for which any of us can give specific advice. Real numbers and situations along with tax expertise is needed.</p>
<p>Crazymomster, you are smart to be thinking ahead, and this could be a real concern to anyone getting large grants and not thinking about tax ramifications.</p>
<p>^^ I don’t think the books and supplies eligibility has been taken away. The wording was always there but the examples posted in the 2011 version have just clarified the rule.</p>
<p>In my daughter’s case, she ended up having to take a loan to cope with the unexpected expenses including taxes, even though she is at a “no loans” school and receiving financial aid to cover tuition, room and board, books, and expenses. There is no parental contribution required in her case, but there is a $2500. student contribution. The COA determined by the school does not consider the taxes she has to pay or medical insurance (perhaps assuming most students are covered under parental medical insurance). Because I have no medical insurance, my daughter had to purchase medical insurance (about $1500.) Her taxes were about $1450., so altogether she needed to come up with $5450. for this school year.</p>
<p>She earned some money herself, but had to pay for her meals when she worked at her school during the summer, although free room was provided. This is an important issue that very low income students who receive aid awards covering almost all expenses should be aware of. My daughter was very concerned about taking any loans at all, and I found out she was trying to get by eating as little and as cheaply as possible and trying to manage without buying required textbooks. I convinced her that she needed to take a small loan each year to cover these additional expenses and avoid the stress of trying to get by on so little money. Unfortunately, I am unable to help her financially at all as I am disabled and barely getting by myself.</p>
<p>Please don’t take any of this to mean that I believe the school should give her more money. We are both thrilled and grateful beyond belief that she is able to attend such a wonderful school. I only want to make other low income parents aware that their student may need to take out some small loans, even at a “no loans” school.</p>
<p>I give your DD a lot of credit in getting by as well as she is,on her own with help of financial aid. It is a rough go, I am sure.</p>
<p>You may want to look into what the costs are for health insurance in your state. In NY, the cost for a young person is not high, far cheaper than what the colleges charge. By getting it independently, you might be able to save a substantial amount.</p>
<p>I never thought of that. She was covered by state insurance for low income children until she turned 19, but the school would not accept that insurance. I will look into other types of insurance for her in my state. Thanks so much for the suggestion.</p>
<p>Find out what is needed to get the insurance covered. THere are certain minimums, and sometimes the coverage can be added to a core policy and make it acceptable. Work with the school with this.</p>
<p>Okay, I will absolutely check into this with the school. If we could save any money on insurance, it would really help. Thanks again.</p>
<p>NewEnglandMother: The example for books you cited is in the Lifetime Learning Credit section of Pub 970.</p>
<p>In the AOC section it gives the same example with a different conclusion:</p>
<p>Related expenses. Student-activity fees are included in qualified education expenses only if the fees must be paid to the institution as a condition of enrollment or attendance.
However, expenses for books, supplies, and equipment needed for a course of study are included in qualified education expenses whether or not the materials are purchased from the educational institution.</p>
<p>Example 2. Grace and William, both first-year students at College W, are required to have certain books and other reading materials to use in their mandatory first-year classes. The college has no policy about how students should obtain these materials, but any student who purchases them from College Ws bookstore will receive a bill directly from the college. William bought his books from a friend; Grace bought hers at College Ws bookstore. Both are qualified education expenses for the American opportunity credit.</p>
<p>This difference between the AOC and the Lifetime Learning credit is not a change from 2010.</p>
<p>Nowhere in the section on taxable portions of scholarships does it say that books, supplies and equipment have to be purchased from the school.</p>
<p>Oh good! Because I included my daughters book expenses as qualified and I didn’t want to be taking a credit that was unqualified - thank you so much for clarifying! Now I am just hoping they extend the AOC for 2013…</p>
<p>This thread has taken a slight bend, but now does bring up the question for us of will we be able to use any of the education credits? Someone earlier posted something about the first $1000 or so qualifies. Of course we will look into more closely at tax time, but what is the general qualification for these credits? Just attend a post-secondary school (basically)?</p>
<p>Thanks.</p>
<p>*****************<strong><em>!!!
Let me second annoying dad and point out that the parts quoted by NewEnglandMother from Pub. 970 (about books having to be purchased from the school in order to count as qualified educational expenses for the particular tax benefit in question) </em></strong><strong>APPLY ONLY TO THE LIFETIME LEARNING CREDIT</strong> AND THE <strong>TUITION & FEES DEDUCTION</strong> (which, BTW, are probably the <em>least</em> beneficial of the various tax credits & deductions for those of us who have kids who are enrolled in a degree program and attending school full time or even half-time)</p>
<p>Nothing has changed regarding textbooks and required materials & supplies in the 2011 Pub. 970 people. For
A) calculating taxable portion of scholarships and grants
B) the American Opportunity Credit
C) the student loan interest deduction
and D) using funds from 529 accounts,
books, materials and supplies are considered “qualified educational expenses” as long as they are <em>required</em> for the particular course. You can buy them wherever you want.</p>
<p>Pub. 970 is long and discusses twelve different “tax benefits for education”. You have to be sure that you’re reading the section that applies to the particular tax benefit that you’re claiming. Luckily, there are a few charts in there that compare some of the different benefits and clarify the differences between them.</p>