<p>1st year student receives substantial scholarship and grants. Has slightly more scholarship/grant money than qualified educational expenses. </p>
<p>School sent tuition bills for Spring 2014 in November of 2013 which I paid in December of 2013.</p>
<p>School sent 1098-T for 2013 that has an amount in box 2 (Amounts billed for Qualified tuition and related expenses) that reflects the billing for Spring of 2014. Box 7 is checked that indicates amount in box 2 includes amounts for academic period beginning January 2014.</p>
<p>They show an amount in Box 5 (Scholarships or grants) that does not reflect scholarship/grants for Spring of 2014. Scholarship/grant was distributed in January, 2014.</p>
<p>Thus the amount billed for QEE far exceeds scholarship/grants in Box 5.
My questions:</p>
<p>Do I (or may I) count the amount I paid in December of 2013 for 2014 expenses on 2014 taxes or MUST I count it on 2013 taxes?</p>
<p>What is the value of a 1098-T if it does not properly reflect amounts billed and scholarships/grants for a given calendar year?</p>
<p>If you use the Search function (little magnifying glass on the R above the list of threads) for ‘1098’, you’ll find several threads asking the same question, here are a couple:</p>
<p>I had the same problem with D1s school. You want to start using your own numbers and keeping records now, because the year they graduate the 1098 will show 0 tuition charged but still show scholarship money given. </p>
<p>entomom:
I did use the search function and found among others the two threads you linked.
One was about switching schools and my answer did not seem clear there.
The other may be applicable but still not clear to me what my answer is. In fact, one statement in that thread seems to contradict what’s been stated here.
In that thread it says “Since the 2012 1098 had box 7 checked but you actually paid and had scholarships credited in 2013, you can use the expenses billed in December 2012 for spring 2013 to offset the scholarships.”
Maybe I’m just slow.</p>
<p>And on that note:
4kidsdad: When you say “See Pub 970” and quote a section, that section is for the credit for the American opportunity credit which I had assumed I could not claim since child’s scholarships and grants were great than the qualified education expenses. But the way the school billed me and recorded it I paid tuition in December for attending school in January and scholarships and grants were not applied until January of 2014.
This would work out to my benefit if I count the tuition that I paid in 2013 (for Fall 2013 and Spring 2014) but I don’t have to count the scholarship/grant that was credited in January 2014.</p>
<p>Again, I might be slow but it seems to me that all of this could be written simpler. </p>
<p>Personally, I would use the scholarships credited in January to offset expenses for 2013 and include what you paid in 2013 for spring in your 2013 expenses. No publication that I’ve ever found addresses this situation specifically. It’s clear you can only use the expenses you paid in 2013 for the AOC on 2013 taxes. If you don’t offset the expenses with scholarships now you are getting a 4 year early advantage in tax breaks. The IRS believes in the time value of money. So even if in your child’s 2nd semester senior year you ‘make it up’ by having no expenses and having scholarships and your child having a lot of taxable income, you got a tax break too early. </p>
<p>Of course, you would have to shift some of the scholarships/grants to non-QEE such as room and board and have your child report more taxable income in order to ‘free up’ QEE for the AOC. Remember to add the cost of required books and supplies to the QEE on the 1098T if you have receipts.</p>
<p>This is just my opinion and you may want to consult a tax advisor but not all of them are that familiar with education tax matters so choose carefully.</p>
<p>
.</p>
<p>That’s a different situation because the person paid in January.</p>
<p>Is there a “Tax Preparation for College Students for Dummies” book?
Seriously, is there a good publication for explaining all this?
I probably need to find a tax preparer that is fluent in financial aid/scholarships/grants.</p>
<p>I think somewhere along the line parents need to be told what they should be doing to keep proper records and keep track of all expenditures. I have an older child that I’ve probably screwed up their taxes the past two years because I counted on the 1098-T to be accurate and my sole source of info.</p>
<p>If something happens before you file your 2013 return that reduces 2013 QEE, you should reduce them by that amount. If you don’t, you can’t wait 4 years for things to settle out. You would have to do a credit recapture on your 2014 tax return. I think a scholarship received in January 2014 has the same affect in this regard as a refund.</p>
<p>Also, regarding taking the AOC, start reading page 13 of Pub 970 where it says:</p>
<p>
</p>
<p>And read the two examples. Example 2 shows a student reporting a scholarship amount as taxable and then that amount is available for the AOC. And remember to add amounts spent on required books and supplies if you have receipts.</p>
<p>annoyingdad: Thank you. Even though I have read 970, I am embarrassed by how much I missed that you have pointed out.</p>
<p>OP: It sound like you paid for expenses that were covered by scholarships that were distributed in January. You might want to check with your school to see if you can defer bills that will be cover by scholarships. My daughter’s school allows this. I only have to pay thee amount that is not covered by scholarships in December.</p>
<p>annoyingdad: Thanks for finding specific sections. I haven’t had time to read through this but I appreciate your time and effort.
I will likely take all my information and go to someone who is expert in tax prep for college students (if I can find one).</p>
<p>If you are not able to figure this out you should contact your Congressman and tell him/her to change this so that it is clear. They are the ones who established this under 26 U.S. Code § 6050S. </p>
<p>If you do not get a response I recommend you find another person to represent you in Congress and start working to help that person get elected. </p>
<p>If you can reach someone at the IRS, you may or may not get a correct answer. </p>