A student is 4 year degree student with WGU and he received Pell grant $ 2908 + WA state need grant - $2810 = Total $5718.
Tuition with WGU was only $3035 for 6 months (that includes books and other fees) term and remaining amount of $2683 was paid to him as refund.
To my understanding this refund money he got is considered taxable income because it was not for qualified expense like Tuition etc.
Once he declare this extra refund he got from his school he can get American opportunity credit correct?
Also if this is considered taxable income can he earn social security quarterly credits ? I am not sure if its considered earned income and I believe
you can only get social security credits if its earned income?
Because amount of refund he got is $2683 I guess he can earn two social security credits?
Yes, the income that was not used for qualified education expenses is taxable.
No, you cannot double dip. You cannot use the same expenses to justify both the exclusion from income for a scholarship and another education tax benefit, such as a tax-free distribution from a college savings plan or the American Opportunity Tax Credit.
No, they do not earn Social Security credits.
Per IRS Publication 970 Tax Benefits for Education : Payment for services. In most cases, you must include in income the part of any scholarship or fellowship that represents payment for past, present, or future teaching, research, or other services. This applies even if all candidates for a degree must perform the services to receive the degree
To enter scholarships with NO 1098-T:
1. Type scholarships in the search box and click search.
2. Click on Jump to scholarships.
3. Continue with the onscreen interview.
To enter your 1098-T:
Don't enter your 1098-T if your employer reimbursed you for the tuition. Otherwise:
1. Open (continue) your return in TurboTax, if it's not already open.
2. In the search box, search for 1098-T or 1098T (lower-case works also) and then click the "Jump to" link in the search results.
3. Answer Yes to Do you want to enter your higher education expenses?
o If you land on the Let's estimate how much you could get this year, click Skip this.
o If you land on the Your Education Expenses Summary screen, first select Edit next to an existing student or select Add a new one before proceeding.
4. Answer any questions that follow. After a few screens, you'll be asked if you received a 1098-T. Answer Yes and click Continue.
5. Enter your Form 1098-T exactly as you see it, even if you think it's wrong. Here are some important tips:
o If any boxes on your 1098-T are blank, leave them blank. Don't enter 0 (this may cause errors later).
o If boxes 1 or 2 on your 1098-T form are wrong, enter those amounts anyway. Then click What if this is not what I paid? right below box 2 and enter the correct amount of tuition paid.
o Don't include grants not already listed in Box 5. We'll ask about those later.
6. Click Continue when you're done entering the information from your 1098-T. Answer any additional questions on the following screens.
Related information:
I am still confused with your answer...any excess financial aid that is received as refund (not used to pay tuition or in other eligible expenses ) can be considered as taxable income for a student correct? and one a student declares that excess as income he will be eligible for american opp. tax credit?