Thanks @Hal_Al for your last reply and all your help!
A few (late) notes and questions, sorry.
– The 1098-T Box 1 ($10,526) includes fall 2023 and spring 2024 charges! No R&B, as you said. (Spring bill posted Dec. 2023; not paid till Jan. 2024). Can I enter my own numbers (just fall QEE) into the 1098-T?
– The 1098-T only counts $368 of the $790 fees we paid as “mandatory.” Except for health fee, could orientation and campus bus fees count not as AOTC QEE but as 529 AQEE?
Perhaps not helpful THIS year since our $4,000 1099-Q is fully covered by the $4,672 taxable scholarship, but could it matter in future years with higher 529 distributions (not all qualified) and lower scholarships, i.e, more 529 taxable earnings?
– Re: 2023 $4,672 taxable scholarship. When is it earned vs. unearned income – if my student has self-employed earned income of $2,935? (Required to file?)
Is that $4,672 first treated as earned income for a dependent deduction of $8,007? ($2,935 + $4,672 + $400?) So no regular student income tax is due?
$2,935 (earned) + $4,672 tax. sch. (earned) = $7,607 income – $8007 ($7,607 + $400) = – $400 or no taxable income?
BUT, that $4,672 is still treated as unearned income (> $2,500) for purposes of calculating kiddie tax? So we will owe kiddie tax on $4,672 – or on $4,272 below?
$2,935 (earned) + $4,672 tax. sch. (unearned) = $7,607 income – $3,335 ($2,935 + $400) = $4,272 taxable income?
Also, I’m confused in future years about how 529 taxable earnings are factored in. Aren’t taxable 529 earnings considered unearned income? (But I’ve read taxable 529 earnings aren’t subject to kiddie tax?)
Using 2024 real and estimated (529) numbers – which is more correct (required to file)?
A) $6,300 (earned income) + $2,000 (taxable scholarship/earned) + $716 (529 taxable earnings/unearned) = $9,016 total income – $8,700 ($8,300 + $400) = $316 child’s taxable income
B) $6,300 (earned income) + $2,716 ($2,000 taxable scholarship + $716 in 529 tax. earnings/both unearned?) = $9,016 total income – $6,700 ($6,300 + $400) = $2,316 child’s taxable income*
*Is kiddie tax due since $2,716 unearned income is > $2,500? Or not – since total taxable income of $2,316 is < $2,500?
Also, if our 19-year-old makes $6,300 in earned income, are they no longer our tax dependent? (No $500 “other dependent” credit?) Does that affect whether kiddie tax is due? Or whether lower dependent deduction is used or full standard deduction ($14,600) in 2024?
Hope I’m getting there. TT will do its own background calculations, but I’m trying to understand how to steer: avoid unexpected tax at year’s end if we use 529 for non-qualified expenses (like $4,500 health insurance premiums, etc.) Thanks again.
