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kameisha01
Level 1

Why don't my 1098 T qualify for a credit?

It said based on the information I've entered, I can not claim an education tax break. I entered everything from my 1098 T
1 Best answer

Accepted Solutions
Hal_Al
Level 15

Why don't my 1098 T qualify for a credit?

You do not qualify for a tuition credit, because almost all expenses were covered by  tax free scholarships. Technically you had $34 of net qualifying expenses (1477 + 800 - 2243 = 34), which should have gotten you a $14 credit, so you still musta entered something wrong.

 

What about your age?  Are you under 24? What about your dependent status; why do  you think you can not be a dependent?

 

You are only allowed to claim the  very generous  (up to $2500, $1000 refundable) American Opportunity Credit (AOC) a maximum of 4 times in your undergraduate  career. You may not want to waste one of those times on a $14 credit. 

 

There is actually a loop hole available to claim the credit, when you are on scholarship.   It takes a work around in TT. 

The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, the parents  (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.

Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.

 

 

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10 Replies
LinaJ2020
Expert Alumni

Why don't my 1098 T qualify for a credit?

If you did not pay any qualified education expenses out of pocket like tuition and books, you may not qualify.  How is your Form 1098-T reported?  The reason why you do not qualify could vary.  It could be you did not pay any tuition expenses out of pocket, or you have financial aid that covers all the tuition or you made too much of money.  To learn more about the eligibility, click the following links: 

 

Credits

 

Deduction

 

Tax Benefits

 

if this does not resolve your issues, please write back with more details and clarification.

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kameisha01
Level 1

Why don't my 1098 T qualify for a credit?

I did not pay any expenses out of pocket besides my books and other supplies like (notebooks,laptop) & I entered the amount I spent on those items 

LinaJ2020
Expert Alumni

Why don't my 1098 T qualify for a credit?

Check here: 

 

You cannot claim an education credit when:

  • Someone else, such as your parents, list you as a dependent on their tax return
  • Your filing status is married filing separately
  • You already claimed or deducted another higher education benefit using the same student or same expenses (see Education Benefits: No Double Benefits Allowed for more information)
  • You (or your spouse) were a non-resident alien for any part of the year and did not choose to be treated as a resident alien for tax purposes (find more information in Publication 519, U.S. Tax Guide for Aliens)
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kameisha01
Level 1

Why don't my 1098 T qualify for a credit?

None of those apply to me 

CatinaT1
Expert Alumni

Why don't my 1098 T qualify for a credit?

Tell us the numbers on your specific 1098T.  What is in box 1 and 5?

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Hal_Al
Level 15

Why don't my 1098 T qualify for a credit?

There's a new urban myth among college students that says they can get a $1000 from the government just for filing a tax form. For most of them, they simply aren't eligible. A full time unmarried student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working. You cannot be supporting yourself on parental support, 529 plans or student loans & grants. You usually must have actually paid tuition, not had it paid by scholarships & grants.  It is usually best if the parent claims that credit. 

 

You cannot claim a credit if you are, or can be, claimed as a dependent by someone else.

 

If you are eligible, you have answered  something wrong, in the interview. But, a lot of people are just not eligible. See https://www.irs.gov/Individuals/AOTC

Hal_Al
Level 15

Why don't my 1098 T qualify for a credit?

In addition to what is in box 1 and 5 of the 1098-T, tell us what you spent on:  books, software  & computers required to be purchased from the school;  other books, software and computers. Notebooks and pencils don't count

kameisha01
Level 1

Why don't my 1098 T qualify for a credit?

Box 1 - 1,476.49 

Box 5 - 2,243.00

I've spent $800 on books and laptop 

Hal_Al
Level 15

Why don't my 1098 T qualify for a credit?

You do not qualify for a tuition credit, because almost all expenses were covered by  tax free scholarships. Technically you had $34 of net qualifying expenses (1477 + 800 - 2243 = 34), which should have gotten you a $14 credit, so you still musta entered something wrong.

 

What about your age?  Are you under 24? What about your dependent status; why do  you think you can not be a dependent?

 

You are only allowed to claim the  very generous  (up to $2500, $1000 refundable) American Opportunity Credit (AOC) a maximum of 4 times in your undergraduate  career. You may not want to waste one of those times on a $14 credit. 

 

There is actually a loop hole available to claim the credit, when you are on scholarship.   It takes a work around in TT. 

The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, the parents  (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.

Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.

 

 

kameisha01
Level 1

Why don't my 1098 T qualify for a credit?

Yes I am under 24, my parents does not file taxes I file myself and my child.  I kinda understand what your saying now. Thanks for the info! 

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