If I’m claiming textbook expenses on taxes, what are the tax implications of say, selling them back on Amazon? The payment is an Amazon gift card, not straight up refund. Thanks.
What do you mean you are “claiming textbook expenses on taxes”?
I need to pay taxes on scholarships which extend beyond tuition and fees. Claiming other mandatory academic expenses, such as textbooks, lowers how much of that $ is taxable.
Well, I know that if the AOTC is claimed on tuition paid in one year but the tuition is refunded the next year after classes are dropped (such that net QEE is then less than $4,000) then there is AOTC recapture on that next year’s tax return.
In my opinion, you should reduce your qualified education expenses by the amount that was refunded to the gift card.
In my opinion, there is no recapture on the taxable scholarships like AOTC recapture.
You may need to amend your tax returns by increasing the taxable scholarships (with the proceeds) and recalculate your tax liabilities. See IRS Pub 970 Chapter 1 & 2.
Taxes are not easy!
According to Kiplinger for the 2014 tax year: “if your return doesn’t include income from a business, rental real estate or a farm, or employee business expense write-offs or earned income credit, the basic 1-in-116 chance of being [audited] dwindles to about 1-in-300.”
@Madison85 , Doesn’t the OP’s question boil down to “How is the income received from selling used textbooks treated for tax purposes”?
I don’t think it is related to what the QEE’s that were reported, because what if there weren’t any?
In my mind, that sale income should be taxable but the it would be potentially offset by the net cost of the asset. The reality of course is that most people don’t declare income from such non-recurring sales if they are not running a business, because the sales are usually lower than their original purchase price. You bought the book for $100 and sold it for $60 - you get a net capital loss of $40, to offset any capital gains you may have had that year.
Similarly, I don’t think if someone uses an Amazon Gift Card (suppose it was a received as a graduation gift) to purchase textbooks, that they should be able to deduct that portion of the expense if they never reported the gift as income.
I would love to see what others think.
Loss on the sale of a personal asset is not deductible - so, no, a student buying a textbook for 100 and selling it for 60 does not have a deductible capital loss of 40.
What if a student buys the textbook for $200, but then just uses the library’s copy all semester, and then sells the textbook to another student for $200 next semester or returns it to the store for a $200 credit?
The student should not be able to use the $200 paid (but later refunded) in calculating assorted tax benefits of education.
for #7 - I agree that a capital loss is not deductible, but it can be used to reduce capital gains on other assets. We don’t have enough information to know what OP’s situation involves.
For #8, if a student buys a textbook for $200 but later gets it refunded, or doesn’t use it because there was a library copy, it would be false to claim that the purchase was needed for class, so I agree they should not get to claim it.
This is essentially the same as when a student buys a book for the first day of class, but drops the class and returns the book for full credit - they should not get the tax benefit, as otherwise it would give students the incentive to sign up for dozens of classes, buying the books just to return them, and dropping all but the few courses they only really wanted.
If the student bought if for $200, used it, and next semester sold to another student for $150, I think they get to claim the full $200 as a necessary expense. How they treat the $150 income is in my mind a completely separate issue.
And more likely, what happens if it is for a year-long course, not just a semester? Suppose the book is purchased in September and sold the following September. The $200 purchase occurs in one tax year, and the $150 sale occurs in the following calendar year, it is a different tax year.
I think the necessary expense would be $50 ($200 - $150)
Nope, you cannot deduct personal use capital losses against capital gains:
[Quote=IRS.gov]
Losses from the sale of personal–use property, such as your home or car, are not deductible. It is not eligible for the capital gains loss of up to $3,000 annually.
Well I can tell you what we are doing. We take the book expenses and reduce it by a scholarship we got for books.
So if you know that you are selling the book before you do taxes just subtract the price you got for it from your expenses…
I have not heard that before.
OP- how much money are we talking about (the excess of your scholarship once mandatory expenses are paid?) You might be jumping through a lot of hoops to save $15 on your taxes. I.e. do it if you get a thrill out of going to the post office every week to drop off a book and salvage some value from it… but don’t bother if you think it will make a material difference in your financial situation since it might not.
~$14-15k for the 2015 tax year
I spent about $600 in the textbooks I’m selling, and will be getting back around $300, which I’ll be using to buy textbooks for spring semester.
I spent about $1000 in lab fees + $800 total in textbooks for the 2015 tax year.
This is after tuition + mandatory fees for all students.
@4kidsdad, it is a small scholarship from our church that is to be used toward books.
@Lilliana330, this is what I would do in your case: If you spend $600 on books per year, $300 ($600-$300) for fall and $300 for spring, then either report $300 for each semester or $600 for the whole year (if you buy the books in different years).
But if you expect to be selling the spring books again, then reduce your fall’16 expense by that amount when you file next year. It’s a bit of a hassle, but I don’t think I would report more than was actually paid for the books.
^ That makes sense, only deducting the net cost. However, I can’t do that straight up, since that’s not how the transactions occurred + I’ll have to attach the receipts, right? So I’ll have to show what I bought them for and then what I sold them for.
Someone mentioned something about property, but since this is an academic expense, isn’t it treated just like tuition/any fees? Like, if tuition were charged by units and I dropped a class, I’d still be able to claim the rest of the tuition left (theoretically).
Anyways, it’s best to ask my tax preparer these questions, but I just wanted to have an idea beforehand. Thanks y’all!