I have a question regarding the amount to include as income. As I understand it, you can take the tax-free scholarships and count as income, so that you receive a higher AOC amount, is that correct? Basically you're just taking the tuition and fees to apply towards the Qualified Expenses and AOC. Does that apply if you get Chapter 33/GI Bill payments also? Can those be counted as income?
We are not going to claim her this year so she can get the AOC credit. Husband's income is too high.
My daughter's situation seems pretty simple.
| Spring 2023/Jan. 2024 | |
| Housing Student Exchange | 3137 |
| Dining Plan | 2247 |
| International student fee | 200 |
| Tuition + fees | 2191 |
| | $7,775 |
| Fall 2024 | |
| Housing | 3930 |
| Tuition | 2190 |
| | $6,120 |
| | |
| TOTAL EXPENSES | $13,895 |
| PAYMENTS | Jan 24 |
| Chapter 33 | 1240 |
| Pmt | 7044 |
| | $8,284 |
Fall 24 Chapter 33 | 1220 |
| Pmt | 1220 |
| | $2,440 |
| $1,921 | Qualified Expenses=tuition/fees - tax free scholarships (4381-2460 per 1099-T)*This is what she would get with the AOC. |
If the $2460 chapter 33 could be counted as income, however, her AOC amount would be the full $2500.
Another person did these computations regarding the 529 distributions: The difference between the total expenses ($13895) and and the tuition/chapter 33 applied to the AOC ($6841) is $7054. This is $79 below the $7133.
| Total Expenses (including room/board) minus scholarships: $11435 ([removed]) |
| Minus $4000k for AOC Credit (or should this be minus the $1921 AOC credit?) |
| =Amt to Be Used Against the 1099-Q Total Distribution=$7435 |
| Divide this Amt by the Total of Box 1 of the 1099-Q (7133)=62%. |
| This percentage of earnings are tax free and remainder are taxed--So 62% of the $52 gain was not taxable and 38% of it ($20 is). |
I hope I'm not making this too confusing. This is the first year I've had to deal with this, since we always claimed our daughters on taxes and couldn't take advantage of the AOC credit. Thank you!
