I have a son in college, how to enter in information regarding expenses and income from his grants to take the AOC credit.

Forum|Forum|6 years ago
March 5, 2020
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The school does not mail out the 1098T statements but they are available on his school account. I am so confused about proper reporting and don't want to get in trouble reporting this wrong. According to the tax publication, 970 page 15 says You may be able to increase the combined value of an education credit if the student includes some or all of a scholarship or grant in income in the year it is received.

I tried just putting in the information from the 1098 T but then I don' t get how to get the credit for the AOC if I input it this way.

I have on the 1098T statement 7708.00 box 5 and I have 3267.28 in box 1 for expenses. What I need to know is based on the tip above can I enter the 7708.00 as other income and then use the 3267.28 as my expenses to qualify for the AOC. This should give me the first part of the credit to reduce my tax due to 0.00 and then I would get the other part in the form of a refund.

For the AOC it also states to claim the credit the law requires you to have received for 1098-T. Since the school doesn't report them but they do provide a statement that is not mailed but i can print am i still able to take the AOC?

Also, as for the Credit side of the AOC it ask if your earned income was less than one half of your support. Technically his food shelter education was provided through grants. We did get some loans. lets say 4K for the year. Assume that would be considered support money? so half would be 2K. Is this correct? so if he earned 3120 then he can qualify then for the additional credit.?

Any help is greatly appreciated! Thank You. I tried asking a local Tax person and he was totally not aware of any of this. Said he never puts the 1098 T information on anyone's return? I was shocked because at the very least if you get more money awarded than expenses that is taxable.

Hal_Al

Employee

Yes, you understand it correctly. Your son reports $7708 of taxable scholarship income on his return and you report $3267 of qualified educational expenses on your tax return. If you or your son are out of pocket for any additional expenses, like books and other course materials, you may add those cost to the $3267.

You have effectively received a 1098-T, by being able to retrieve it from the web site. The school has "Issued' a 1098-T and the requirements of the law have been met.

The stuff about earned income being more than half the student's support is only applicable if the student wants to claim the AOC credit on his own return. The rule does not apply when the parent(s) is claiming the AOC.

You essentially have to use a work around in TurboTax (TT). Here's how I would do it. Enter the 1098-T, on your return, but only enter $3267 in box 1. No other numbers, except book costs at the books screen (if you have any). You only enter the 1098-T to get TurboTax to check the proper box on form 8863. Lying to TurboTax to get it to do what you want does not constitute lying to the IRS.

On your son's return, Enter the 1098-T with $7708 on box 5 and 0 in box 1.

gchmelewskiAuthor

Thank you sooo much. He will be filing his own return though. The reason I want to do it this way is so that he is able to get health insurance from the Marketplace. There is an income threshold to qualify for that and we are using the income from his grants to do so. With that being said he has to file his own return to have market place insurance.

But for this tax year he should still be able to meet the support option to claim that refundable credit part correct?. I did not know that difference you mentioned if it were filed on parent return. That's good to know.

So would i enter the 1098-T both numbers on his return then to get to the credit?

Hal_Al

Employee

Q. But for this tax year he should still be able to meet the support option to claim that refundable credit part correct?

A. No. He did not provide more than half his own support with earned income.

A person can file a tax return and still be a dependent on his parent's return. I'm not familiar with the rules for obtaining "marketplace insurance. That's another topic.