@Carl: I couldn’t figure out how to log back in as vmi9d3rmwc9d6 so I am now vmi9d3.
Thank you so much for your prompt reply. I feel I didn’t clearly ask my questions, thank you for your patience as I try again and respond to your info:
I didn’t use any 529 distributions for this student. He is on a ROTC scholarship which covers the tuition and fees and then the school gives him a scholarship. If his total bill (tuition, qualified fees, room and board, other fees which are not qualified expenses) is less then the amount of scholarships he receives the school will give him a check for the difference.
Here are more details regarding the 1098-T, box 5 is $17,050 greater then box 1. There was also about $5500 in W2 income.
As I work through TT and I get the question "Did you pay for room and board with a scholarship or grant" and I answer yes it then request how much of the scholarship was used for this expense? For one semester of the calendar year 2019 his room and board were listed on the Bursar bill, so I can easily calculate it, for the 2nd semester he lived off campus in a rental apartment. There are 2 items I am trying to understand:
- When I answer the question about how much of the scholarship was used for room and board, I initially answered all of it, $17050. But I realized not all of it was and only $12000 of the $17050 was used. Putting the $12000 for this question decreases the federal tax vs when I enter the whole $17050. In both scenarios since scholarship money is being used for a non-qualified expenses (room and board and other things which are not qualified expenses) what difference does it make how much of the $17050 was used for room and board?
- While living off campus, I know the amount of rent (room) he paid, but I have no idea how much food (board) he ate and he didn’t track it. Is there a standard $ figure (college student for 1 semester) to use that the IRS will accept or to I have to just ignore the board portion of the question “Did you pay for room and board with a scholarship or grant”.
In general I am resigned to the fact the student needs to pay taxes on the scholarship money used for non qualified expenses, just trying to understand the details and why an amount less then the difference between block 5 and 1 on the 1098T for the room and board question returns a smaller tax liability.
Thank you for your assistance.
