EE and I savings bonds sold to pay for education and also eligible for American Opportunity Credit

Forum|Forum|3 years ago
February 24, 2023
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I am eligible to take the American Opportunity education credit. I also redeemed EE bonds and I bonds to pay for college.

Is the following scenario possible: Am I able to split the amount in Box 1 on my 1098T and apply them on two separate tax forms? I was also given a scholarship that is listed in Box 5.

Here is my example using fictitious values. Assume on my 1098T that box 1 is $10,000 and box 5 is $1000. Can I use $5000 from box 1 and $1000 from box 5 (of my 1098 T) to give me the $4000 needed for my American Opportunity education credit and take the remaining amount of $5000 from box 1 to allocate to reduce the tax implications for the EE bonds and I savings bonds sale? In other words, can I split up the 1098 T into two areas of my tax return? Thank you...

Hal_Al

Employee

Yes, you can do that and that is exactly how it should be done.

Enter the 1098-T first and manually calculate how much tuition you have left for the savings bond exclusion (just like your example). Enter the manually calculated amount at the Screen "Report education Expenses and Benefits" in the Savings Bond Interest section. Do not duplicate Scholarships, accounted for at the 1098-T section at the Savings bond section

Hal_Al

Employee

Here's something to consider.

Room and board are not qualified expenses for the savings bond interest educational exclusion.

Room and board are qualifying expenses for a 529 plan distribution to be tax free,

A 529 plan contribution is a qualified expense for the proceeds of cashing savings bonds. The "rollover" must be done within 60 days and in the same calendar year.

Reference: https://www.savingforcollege.com/article/how-to-rollover-us-savings-bonds-into-a-529-plan