Can I claim the amount for 1098 T education expenses not covered by scholarships that I paid out of pocket?

[whyme940]

1098 T shows $7300 in box 2 and $5225 in box 5.  The remaining $2075 I paid out of pocket.  Does TT already include the diff paid by me or can I list it in the "other education expenses" field that comes up later?

[whyme940]

The additional information was nice and helpful, but I'm not sure you understood exactly what I am asking.  The $2075 I paid out of pocket is for the balance of the Tuition/Enrollment fees listed in the 1098 box 2, the balance left after the scholarship is applied.  The TT program doesn't allow me to add it to the Box 1 'payments' field on the 1098, and it isn't "Books/Materials Required" on the Other Expenses section - so I don't see where else I can enter it.  So I can only guess that TT has assumed that those items are being covered by us?

[Carl]

Your assumptions are correct. To double-check myself, I did a scenario with $5000 in box one and $3000 in box 5. At the end, I qualified for $2000 on the American Opportunity Credit, which is only applied against out of pocket expenses. So the only way I could have "qualified" for that, would be if the program 'assumed" I paid the balance out of pocket.

[asuncion-c73]

I'm also a parent that paid for my daughter's school. I have $8450 in box 2 and $2383 in box 5 which leaves me $2383 balance out of pocket. But in reality I have paid in total $7954 for what scholarship/pell grants didn't pay. Where do I add the rest of the $5571 that I paid out of pocket?

[Carl]

Unfortunately, nowhere. The tuition deduction expired at the end of 2016 and was not extended or renewed by congress for the 2017 tax season. So your out of pocket expenses are not deductible. Though you may qualify for the AOC or Lifetime Learning Credit.

[maglib]

Donald Trump signed today and extension of the tuition deduction and many other deductions and therefore the IRS has many forms to change and it will be a while before all the updates can be made. The IRS is trying to see how they can implement such last minute changes.

[Carl]

You are asked for that stuff and more, AFTER you enter the 1098-T and continue on. I see you're the parent. With a potential PCS move looming in the middle of those college years, you may wish to print the below to help keep your head straight during tax season for the next few years. :)

• College Education Expenses

Colleges work in academic years, while the IRS works in calendar years. So the reality is, it takes you 5 calendar years to get that 4 year degree. With that said:

 - Scholarships and grants are claimed/reported as taxable income (initially) in the year they are received. It does not matter what year that scholarship or grant is *for*

- Tuition and other qualified education expenses are reported/claimed in the tax year they are paid. It does not matter what year they pay *for*.

Understand that figuring out who claims the student as a dependent, and determining who claims the education expenses & credits, is two different determinations. It depends on the specific situation as outlined below. After you read it, I have also attached a chart at the bottom. You can click on the chart to enlarge it so you can read it. If it’s still to hard to read on your screen then right-click on the enlarged image and elect to save it to your computer. Then you can double-click the saved image file on your computer to open it, and it will be even easier to read.

Here’s the general rules gisted from IRS Publication 970 at http://www.irs.gov/pub/irs-pdf/p970.pdf Some words are in bold, italicized, or capitalized just for emphasis. This is because correct interpretation by the reader is everything. Take the below contents LITERALLY, and do not try to “read between the lines”. If you do, you’ll interpret it incorrectly and risk reporting things wrong on your taxes. For example, there is a vast difference between “can be claimed” and “must be claimed”.  The first one indicates a choice. The second one provides no choice.

If the student:

Is under the age of 24 on Dec 31 of the tax year and:

Is enrolled in an undergraduate program at an accredited institution and:

Is enrolled as at least a half time student for one academic semester that begins during the tax year, (each institution has their own definition of a half time student) and:

the STUDENT did NOT provide more that 50% of the STUDENT’S support (schollarships/grants received by the student ***do not count*** as the student providing their own support)

Then:

The parents will claim the student as a dependent on the parent's tax return and:

The parents will claim all schollarships, grants, tuition payments, and the student's 1098-T on the parent's tax return and:

The parents will claim all educational tax credits that qualify.

If the student will be filing a tax return and:

The parents qualify to claim the student as a dependent, then:

The student must select the option for "I can be claimed on someone else's return", on the student's tax return. The student must select this option ieven f the parent's qualify to claim the student as a dependent, and the parents do not claim them.

Now here’s some additional information that may or may not affect who files the 1098-T. If the amount of scholarships/grants exceeds the amount of qualified education expenses, the parent will know this when reporting the education on their tax return, because the parent will not qualify for any of the tax credits. (They only qualify for tax credits based on out-of-pocket qualified expenses not covered by scholarships/grants.)  Also, the parent’s will not qualify for the credits depending on their MAGI which is different for each credit, and depends on the marital status of the parent or parents.

In the case where scholarships/grants covers “all” qualified education expenses, the parent’s don’t need to report educational information on their dependent student at all – but they still claim the student as a dependent if they “qualify” to claim the student.

 If the scholarships/grants exceed the qualified education expenses, then the student will report the 1098-T and all other educational expenses and scholarships/grants on the student’s tax return. The student will pay taxes on the amount of scholarships/grants that are not used for qualified education expenses. However, if the student’s earned income reported on a W-2, when added to the excess scholarships/grants does NOT exceed $6200, then the student doesn’t even need to file a tax return, and nothing has to be reported.

If the student has any other taxable income not reported on a W-2, and it exceeds $400, (not including taxable portion of scholarships/grants) then most likely it’s considered self-employment income. That will require a tax return to be filed and the student will have to pay the Self-Employment tax on that income.

Finally, regardless of the student’s W-2 earnings, if any taxes were withheld on those earnings and it was less than $6200, then the student should file a tax return so as to get those withheld taxes refunded.