AmyC
Expert Alumni

Education

1. Yes the earnings are taxable IF they weren't used on qualified expenses. There is a formula to calculate AQEE and the taxable portion. Let's see if we can get to nothing taxed instead.

2. The 1098-T is an informational form. I found the students actual bursar account and my money paid to the college were better when audited.

3. Box 2 is supposed to be the amount billed. This can be using any accounting method the college wants as long as they use the same one each year. We have no way of knowing their thought process other than, this is what they claim they billed - maybe it was after scholarships on their side? You could ask the school. Again, your paperwork trail is your best defense.

4. If you are talking to Hal_Al somewhere in another chat, expect excellent answers. I don't see any calculations with David's numbers.

 

From what I see, I would imagine the entire Q can probably go towards 529 for Room and Board which includes kids living at home and off campus. Next, determine if you qualify for a credit. You cannot claim the credit if your MAGI is over $90,000 ($180,000 for joint filers). If you qualify, then you want to shift $4k to tuition covered by you and let the student claim everything else.

 

There are a lot of variations and I can play the what if game longer but this gets you started and you can always reply back with more facts.  

Step 1 - do you need the 1099Q to be reported? 

Step 2 - do you qualify for education credit?

Step 3 - $9481 of tuition, either goes against scholarship income or is split to be used for credit.

 

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