<p>This should be made into a sticky post.</p>
<p>I should note that everything that I wrote is still good for 2005 and probably 2006, absent some big tax law change.</p>
<p>I have bumped this because I think it should help a number of parents and should have stayed in the sticky section of the forum or put in some reference section. Hope this helps.</p>
<p>this thread--just what I was looking for</p>
<p>taxguy,</p>
<p>What is the name of your book?</p>
<p>beprepn</p>
<p>Beprepn, I can't give the book's name because it would violate Terms of Service for this forum. However, if you send me a private message or email, I will tell you the book name and the best places to obtain it.</p>
<p>taxguy~</p>
<p>Another thanks for all of your helpful info! ~berurah</p>
<p>I was a little amazed to discover that QTP can also qualify for losses.</p>
<p>? What about Coverdell's. Do they also fall into same tax treatment as 529's in regard to losses?</p>
<p>Thanks taxguy. My senior received full scholarship in her junior year (2004-2005) - 3/4 the regular academic money, but the balance athletic (one year award from the coach), and, fall 2005, she received more academic money, so I am only paying a small amount of her board. I know you posted that you do not give specific advice, however, can you (or perhaps Xiggi, or anyone else) help me try to understand that if her college paid 100% of everything, including books, medical care, etc. for the academic year, but I paid for her support during the summer (where she stayed in school, completed another 12 credit hours, but had no scholarship assistance), I am still not going to meet the dependency test, because I will NOT meet the 50% standard, right? The difficult part is the tuition, which runs about $28K, which academic scholarship always covers, and so it's hard to pay enough board and other support to equal that $28K. </p>
<p>In my case - single and no other dependents - I am guessing this likely means that I will lose my head of household filing status (since there will not be a qualifying dependent) and she will have to pay taxes on the scholarships? </p>
<p>Thanks in advance for your help - and thank you very much for what you have already posted.</p>
<p>See my post #13 on the first page. </p>
<p>Take the position that is most beneficial to you, and make sure to document your situation.</p>
<p>Thanks, I should have read your post and Publication 501 first, it clearly says on page 12 "a scholarship received by a child who is a full time student is not taken into account in determining whether the child provided more than half of his or her own support".</p>
<p>I am filing taxes this week and I think I understand how this works, but can someone check me?</p>
<p>I am a returning student and I recieved pell grants in the amount of $2025 to pay for fall semester. 100% of that went towards tuition and books and required supplies. </p>
<p>If I understand correctly, the grant is not taxable, so I do not need to report it anywhere on the 1040 AND since I did not spend anymore than that on tuition and books/required supplies, I CANNOT take a hope or lifetime learning credit or tuition deduction.</p>
<p>Does that sound right?</p>
<p>thanks!!!!!!</p>
<p>You didn't spend more than the 2025 Pell Grant? How was that possible? Did your child receive tons of merit aid?</p>
<p>sorry I didn't make myself clear -- I am the student (my oldest is just a high school freshman).</p>
<p>I recieved a pell grant and a colorado state grant and I went to community college. My husband does not make much, so I made sure to only take the amount of classes I could pay for with grants.</p>
<p>Next year will be a different story -- I am going to the university spring semester and I will be receiving scholarships in addition to the grants (our EFC is 0 right now) but the university tuition is approximately $11,000 a year as opposed to approximately $5500 a year for community college -- so 0 EFC or not, I will be paying some of that tuition out of my pocket.</p>
<p>I just wanted to make sure I completely understand how this works -- I don't want to mess it up.</p>
<p>You can use the Hope tax credit if you make under a certain income, which seems to be the case, on actual tuition payments that you make that aren't covered by some tax exempt plans such as Coverdale IRA, ROTH IRA, prepaid tuition etc. If it is a grant that you never had to pay, you can't take the Hope credits.</p>
<p>Don't forget, there is also a lifetime earning credit that you can take. Check it out too.</p>
<p>thanks -- i will take another look at the hope and lifetime learning credits. I think that since the grants covered the tuition and books, i can't take the hope or lifetime learning credit since none of the necessary money was out of pocket (of course I had other expenses, but they are not counted).</p>
<p>Next year I will definitely be able to use the hope or lifetime learning credit, as a good portion will be out of pocket with the higher tuition rate.</p>
<p>I did note that for 2006, they will be eliminating the tuition and fees deduction -- from the 1040 instruction booklet for "What's New for 2006"</p>
<p>"Tuition and fees deduction expires. You cannot take a deduction for qualified tuition and fees paid in 2006. But you still may be able to take a credit for these expenses"</p>
<p>i think this is really going to hurt! taking tuition as a deduction lowered the AGI and really helped in many cases--I am hoping this is one of those things they renew just in time for 2006 taxes.</p>
<p>it appears that if you are lucky enough to receive a full-tuition scholarship but have to pay room & board, and decide to take out a loan for that room & board, the interest you pay on that loan is deductible from gross income.</p>
<p>that's what I thought -- I did not declare the grants and I did not take a credit for the tuition and books. It will most likely work out the same next year (lucky for me!). Of course, room and board is a little different for me -- still living in a house with my husband and kids, but I did take out a small loan to make up for some of the shortfall of me not working (I am taking 22 hours a semester to get done quick and really didn't want to mess up my GPA by working).</p>
<p>It looks like I did the taxes right, thank goodness, and didn't take too many deductions or short myself. I will be e-filing on the 13th and will be done with FAFSA and taxes for the year! YEA!!!!!</p>
<p>Seeing as how it's tax time again, I thought this post deserved another bump. I remembered it from last year and had to search for it because I just started working on our tax returns (both our own and our son's) and really got confused about how to handle the scholarships and dependent status. Taxguy's explanations really helped me figure things out.</p>
<p>I hope the mods will reconsider making this a sticky post, at least through tax season.</p>
<p>I love this post!
It helped me understand the whole "is this scholarship taxable" issue so much better!
Thanks, Taxguy.</p>