education

[EricCBenson]

Why does it say I entered $0 for my daughters college tuition?  There has been no place where I've been asked to enter this amount - though it says I entered this amount previously.

Also, is it okay for me to enter amounts for tuition, books, room and board, etc. if my daughter paid for these things with scholarship money, ESA money and loans?

[SusanY1 · Accepted solution]

This sometimes happens when the program transfers over information from the prior year.  The entry area for tuition that populates this screen is at the end of the education section. 

Yes, you can enter the amounts paid with loans.  The amounts paid with scholarships and ESAs will be adjusted by the program for purposes of calculating the credit, which is based on the net tuition paid after scholarships and tax-free withdrawals from ESAs.   

You may allocate funds from ESAs to things like room and board first, which may reduce the effect that those withdrawals have on the net tuition expense.  

[Hal_Al]

Go through the entire education interview until you reach a screen titled "Your Education Expenses Summary".  Click edit next to the student's name. That should take you to a screen “Here’s your Education Summary”. Click edit next to the section you want to change; tuition, in your case.

Q. Is it okay for me to enter amounts for tuition, books, room and board, etc. if my daughter paid for these things with scholarship money, ESA money and loans?

A. Yes, to expenses paid by loans.  "Sort of"  to expenses paid by scholarship and ESA money.  Scholarship and ESA money are usually tax free, if used to pay for qualified expenses.  But you can't use the same expenses to claim a tuition credit.  But you can claim a tuition credit but declaring some of the scholarship or  ESA money as taxable.

Example:
  $10,000 in educational expenses(including room & board)

   -$3000 paid by tax free scholarship*

   -$4000 used to claim the American Opportunity credit

 =$3000 Can be used against the 1099-Q (ESA distribution)

Box 1 of the 1099-Q is $5000

Box 2 is $600

3000/5000=60% of the earnings are tax free

60%x600= $360

You have $240 of taxable income (600-360)

*Another alternative is have the student report some of his scholarship as taxable income, to free up some expenses for the 1099-Q and/or tuition credit.