My son was a college freshman. In 2016, He received $2,500 to pay for tuition and I helped to pay $1,700. He also got $1,600 housing aid from college to pay for room and board and I paid another $3,500. TurboTax only asks how much of that $4,100 (2,500+1,600) was used to pay for room and board. Why it won't ask for that for tuition?
You'll need to sign in or create an account to connect with an expert.
The program is asking how you want to handle the tax-free assistance first.
Of the $4,100 tax-free assistance, how much of that do you want to apply to Room and Board?
Whatever you don't apply to Room and Board, will be applied to tuition.
You don't say what the tuition and fees amount paid to the school is. You should have gotten a 1098-T, which you would report. You also want to check the student's school account records.
The American Opportunity Tax Credit is the most valuable credit, and the maximum credit is based on $4,000 worth of education expenses not paid with tax-free assistance.
If your son's 2016 tuition was $4,200 (2,500 + 1,700) then you might want to apply $3,900 to room and board. This would apply 200 to tuition, leaving 4,000 tuition to apply to the credit. The 3,900 used for room and board is reported as taxable income on the student's return.
The credit should be more valuable to you that what the student needs to pay as tax on the scholarship income that went to room and board.
The IRS is lenient about allowing taxpayers to claim the best education credit they are eligible for.
Click the link below for examples the IRS gives for maximizing the credit by allocating tax-free assistance as taxable income for the student.
CLICK HERE for IRS Pub 970 Tax Benefits for Education
The program is asking how you want to handle the tax-free assistance first.
Of the $4,100 tax-free assistance, how much of that do you want to apply to Room and Board?
Whatever you don't apply to Room and Board, will be applied to tuition.
You don't say what the tuition and fees amount paid to the school is. You should have gotten a 1098-T, which you would report. You also want to check the student's school account records.
The American Opportunity Tax Credit is the most valuable credit, and the maximum credit is based on $4,000 worth of education expenses not paid with tax-free assistance.
If your son's 2016 tuition was $4,200 (2,500 + 1,700) then you might want to apply $3,900 to room and board. This would apply 200 to tuition, leaving 4,000 tuition to apply to the credit. The 3,900 used for room and board is reported as taxable income on the student's return.
The credit should be more valuable to you that what the student needs to pay as tax on the scholarship income that went to room and board.
The IRS is lenient about allowing taxpayers to claim the best education credit they are eligible for.
Click the link below for examples the IRS gives for maximizing the credit by allocating tax-free assistance as taxable income for the student.
CLICK HERE for IRS Pub 970 Tax Benefits for Education
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
TaxMe22Much
Level 1
barhill1
New Member
raystuff1
New Member
Simonr78248
New Member
Saveus7
New Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.