Education

Let's start with the 1099-Q. Did all of it get used on 529 qualified Room and Board  and Qualified Education Expenses - Internal Revenue Service?

• If yes, do not enter the Q into the program.
• If no, you do have a taxable portion.

IRS Publication 970, Tax Benefits for Education states:

Page 45: Don't report tax-free distributions (including qualifying rollovers) on your tax return.

Please remove the form and keep it with your tax files.

1098-T  If you qualify for an education credit, that is the first goal. You cannot claim the credit if your MAGI is over $90,000 ($180,000 for joint filers). 

Step 1 -Do you qualify for an education credit (see What You Need to Know about AOTC and LLC:(

Yes, can claim the credit:

Are the scholarships restricted to paying for tuition?

• If restricted, remove those funds from the eligible scholarships.
• If not restricted, excellent.

How much tuition is in box 1 - we need $4k for AOTC or $10k for LLC

• For AOTC
• If less than $4,000 we want to use it all and make the scholarships go 100% toward room and board.
• If more than $4,000, scholarships can cover the amount over $4,000 and the rest to room and board.

No, can't claim the credit:

• the 1098-T is entered on the student return

Does the student need to file a tax return is the next question. Take this quick quiz, Filing requirement. 

For example: 1098-T box 1 is $15,000, box 5 17,000

Need $10k for LLC

Tuition is $15,000 - 10k for LLC is $5k to be covered  by scholarships.

Scholarships are $17k and use $5k on tuition. This leaves $12k to go towards room and board.

You get the full LLC.