All Posts

You can report water damage to your rental property as a casualty loss on IRS Form 4684 (Section B for property not covered by insurance). Deduct unused repair costs from Schedule E. Keep all receipts and documentation for proof. Consult a tax pro for specific situations that differ.

Q. Both 529 and Scholarship for Room and Board (R&B) are taxed? A. No.  Basically, you just need to enter the R&B expenses in TurboTax (TT), so that TT can allocate R&B to the 529 distribution. Enter the 1099-Q for the 529 plan distribution before entering educational expenses, including R&B (TT will not give you the R&B entry box, in the educational expenses [1098-T] section, unless you need it for a 529 or ESA distribution).    Q.  We fully understand the scholarship (R&B) portion is taxable. A. Yes, but not exactly.  Technically, that portion of the scholarship is taxable because it did not cover qualified educational expenses (QEE), tuition, fees and books/computer, not because it was used for R&B. Since the scholarship is already taxable, you can allocate the room & board expenses to the 529 distribution.  Although R&B is not QEE for purposes of tax free scholarship and the tuition credit, R&B is QEE for a 529 distribution.    Q. I realize we did not specifically pay it from our money rather with the schools funds.   A. It doesn't matter what funds paid for what.  At tax time, you are generally free to allocate expenses where they give you the most tax benefit. So, you will allocate R&B to the 529 distribution, not to the already taxable portion of the scholarship.     Furthermore, you can usually allocate some of the tuition (usually $4000) to the American Opportunity Credit (AOC), if your income is not too high ($90K, $180K married).  See two full discussions, on this subject, below.    Provide the following info for more specific help: Are you the student or parent. Is the  student  the parent's dependent. Box 1 of the 1098-T box 5 of the 1098-T Any other scholarships not shown in box 5 Does box 5 include any of the 529/ESA plan payments (it should not) Is any of the Scholarship restricted; i.e. it must be used for tuition Box 1 of the 1099-Q Box 2 of the 1099-Q Who’s name and SS# are on the 1099-Q, parent or student (who’s the “recipient”)? Room & board paid. If student lives off campus, what is school's R&B on campus charge. If he lives at home, the school’s R&B “allowance for cost of attendance” for student living with parents. Other qualified expenses not included in box 1 of the 1098-T, e.g. books & computers How much taxable income does the student have, from what sources Are you trying to claim the tuition credit (are you eligible)? Is the student an undergrad or grad student? Is the student a degree candidate attending school half time or more? ______________________________________________________________________________________________ Qualified Tuition Plans  (QTP 529 Plans) Distributions General Discussion It’s complicated. For 529 plans, there is an “owner” (usually the parent), and a “beneficiary” (usually the student dependent). The "recipient" of the distribution can be either the owner or the beneficiary depending on who the money was sent to. When the money goes directly from the Qualified Tuition Plan (QTP) to the school, the student is the "recipient". The distribution will be reported on IRS form 1099-Q.  The 1099-Q gets reported on the recipient's return.** The recipient's name & SS# will be on the 1099-Q. Even though the 1099-Q is going on the student's return, the 1098-T should go on the parent's return, so you can claim the education credit. You can do this because he is your dependent. You can and should claim the tuition credit before claiming the 529 plan earnings exclusion. The American Opportunity Credit (AOC or AOTC) is 100% of the first $2000 of tuition and 25% of the next $2000 ($2500 maximum credit). The educational expenses he claims for the 1099-Q should be reduced by the amount of educational expenses you claim for the credit. Room and board (R&B) are also qualified expenses for the 529 distribution, but not the AOC. But be aware, you can not double dip. You cannot count the same tuition money, for the tuition credit,  that gets him an exclusion from the taxability of the earnings (interest) on the 529 plan. Since the credit is more generous; use as much of the tuition as is needed for the credit and the rest for the interest exclusion. Another special rule allows you to claim the tuition credit regardless of whose money was used to pay the tuition. In addition, there is another rule that says the 10% penalty is waived if he was unable to cover the 529 plan withdrawal with educational expenses either because he got scholarships or the expenses were used (by him or the parents) to claim the credits. He'll have to pay tax on the earnings, at his lower tax rate (subject to the “kiddie tax”), but not the penalty.   Total qualified expenses (including room & board) less amounts paid by scholarship less amounts used to claim the Tuition credit equals the amount you can use to claim the earnings exclusion on the 1099-Q.  Example:   $10,000 in educational expenses (including room & board)    -$3000 paid by tax free scholarship***    -$4000 used to claim the American Opportunity credit  =$3000 Can be used against the 1099-Q (on the recipient’s return)   Box 1 of the 1099-Q is $5000 Box 2 is $2800 3000/5000=60% of the earnings are tax free; 40% are taxable 40% x 2800= $1120 There is  $1120 of taxable income (on the recipient’s return)   **Alternatively; you can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. Again, you cannot double dip!  When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records, in case of an IRS inquiry. On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."  ***Another alternative is have the student report some of his scholarship as taxable income, to free up some expenses for the 1099-Q and/or tuition credit. Most people come out better having the scholarship taxable before the 529 earnings. A student, with no other income, can have up to $14,600 of taxable scholarship (in 2024) and still pay no income tax.  ____________________________________________________________________________________________ There is a tax “loop hole” available to claim an education credit, for the parents of students on scholarship. The student reports all his scholarship, up to the amount needed to claim the American Opportunity Credit (AOC), as income on his return. That way, the parents  (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this  if the conditions of the grant are that it be used to pay for qualified expenses. Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return. Books and computers are also qualifying expenses for the AOC. So, extending the example, the student had another $1000 in expenses for those course materials, paid out of pocket. She would only need to report $5000 of taxable scholarship income, instead of $6000. The IRS actually encourages use of this technique. From the form 1040 instructions: “You may be able to increase an education credit if the student chooses to include all or part of a Pell grant or certain other scholarships or fellowships in income. For more information, see Pub. 970, the instructions for Form 1040 and IRS.gov/EdCredit".  PUB 970 even has examples of how to do the “loop hole”.      

Bonjour,  Si j'inscrit que les deux enfants n'habitent pas avec le père des enfants, celui-ci n'aura pas droit au au montant pour une personne à charge admissible de 15705$.  Y a-t-il un endroit dans le logiciel afin de pouvoir cocher une case pour que l'aide gouvernemental aux familles et l'allocation canadienne pour enfants ne s'ajoutent pas aux impôts du père ?  Merci de me revenir    

With all due respect Robert, that doesn't answer my very specific and somewhat nuanced question.  As a citizen of Canada and the USA and now Italy, where I am living and a tax resident, I of course understand that I have a filing obligation in the USA too because that is citizenship based.  Not so in Canada, where I haven't resided for many years and have no tax filing responsibility.  My question relates to Form 1116 and the FTC and how to accurately address the Canadian sourced interest income.  Of course Italy will tax my worldwide interest income because I am tax resident there.  The USA will of course provide a FTC for the tax that I pay on my USA sourced interest income and I am aware that I have to "re-source" that USA based interest income on Form 1116 in order to under tax treaty essentially pretend that the USA based interest income was sourced in Italy, as that will then provide the USA FTC re tax paid on that USA based interest income paid to Italy.  It is the Canada sourced interest income and Form 1116 that I am concerned about.  Would that also be "re-sourced" by ticking that box on Form 1116 just like I am doing for the USA based interest income?  Or alternatively, would the Canada sourced interest income be considered "passive income" with that box ticked on Form 1116?  As it relates to my USA tax and the FTC, I should of course get credit for the Italian tax that I will pay on BOTH my USA sourced and my Canada sourced interest income, so this is more of a technical question as it relates to Form 1116 and what box to tick for the Canada sourced interest income.

Thanks for your response and showing exactly how to use the workaround. It helps to confirm that I am using the work-around properly. But does this mean you are not going to fix the TurboTax 2024 software? If so, can you please explain why. I would prefer to submit my return using a fully functional TurboTax 24 without having to use the work-around. Thanks.

Payment of taxes owed is not paid using wire transfer.  You either send a check with a payment voucher, direct debit from your bank account or payment with a credit card.   In the File section of the program on Step 2, if you have taxes owed there are several options on how to pay the taxes.

Age is not a factor for payment of Social Security and Medicare Taxes.  If you are not receiving a W-2 from your employer then you are Self-Employed.  If you have a net profit from the self-employment you will owe Self-Employment taxes on the income.  You pay SE Taxes of 15.3% on your SE income, which is both the employer and employee portion of SS and Medicare taxes. \

@Fluffyfox1 wrote: I have no address of where I mail my taxes to  The Filing Instructions page will have the address on where to mail the tax return.  Use Print Center to get the Filing Instructions page.   To access your current or prior year online tax returns sign onto the TurboTax website with the User ID you used to create the account - https://myturbotax.intuit.com/   When you sign onto your online account and land on the Tax Home web page, scroll down and click on Add a state.  This will take you back to the 2024 online tax return. Click on Tax Tools on the left side of the online program screen.  Then click on Print Center.  Then click on Print, save or preview this year's return.  Choose the option Include government and TurboTax worksheets