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Probably. The amount received isn't a lot when considering cost of higher education costs today. As long as student meets the requirements for the funds to be tax free, he or she can exclude it and sounds as though it may be the case. Then for the parents, was the net amount paid after reduction for the scholarship still more than the allowed amount so that the credit claimed is still unchanged and correct? If so, then even though the amount of education expenses shown as paid was the incorrect amount, no amendment is needed. I agree with Tom that you may be overthinking this.

I thought about switching back in 2012. I've only heard good things about Drake. But I just couldn't get thru the change. Stayed with ATX. I plan only a few more years so I guess I'll just stick with ATX and pay.

I think you are overthinking it. It was presented as a scholarship and it was used for tuition. I think it should be included like any other scholarship when you start looking at the education credits. Tom Longview, TX

I put everyone on extension whose returns are not 100% ready and just waiting for signatures as of the beginning of April. Then, if we finish, no harm no foul. If the clients don't get me the information, no harm no foul - and no racing on the last day to get extensions filed. If later we find someone should send in money, I send them the Direct Pay (& state equivalent) link, or a paper coupon to print and then to mail in with a check. But that's also on the clients getting me enough information.

The one way back was a very weird case - but all it takes is one weird case and you end up over-thinking and wondering if the new situation is analogous to the older weird one. Thanks to all for responses.

It depends. I believe it is included as earned income for purposes of calculating the student's standard deduction, and any amount above that is unearned and subject to the kiddie tax, that is if kiddie tax applies to this child. Check me on this though.

Ouch. Fall 2023 tuition & fees were $5,415. If parents took any education credit, that leaves at least some scholarship monies taxable to the student. Family is on vacation in CA as the student's HS graduation present. I think I'll wait until they're home to deliver bad news. Gotta check with software to find out how to enter this. Earned income, right? Darn.

But the parents already took the education credits for their dependent and have possession of the Form 1098-T. (I don't prepare the parents' return.) So, the parents would subtract the private scholarship from tuition before calculating the LLC or AOC; and the student does NOT report the scholarship on his return?

https://www.fincen.gov/boi https://www.fincen.gov/boi-faqs https://www.fincen.gov/boi/Reference-materials https://www.fincen.gov/boi/small-business-resources https://www.fincen.gov/sites/default/files/shared/BOI-Informational-Brochure-April-2024.pdf

I don't know for sure that it wouldn't be challenged, but I would not advise the client to do this. As Marilyn said, I wouldn't want to touch this.

It may be written as a "buy-out" but is still merely a dividing of marital assets where the dividing of cash is either not exactly equal and is used to balance out the other asset values being unequal, or it is for some other reasoning so that both parties will agree to settle.

I agree! At first I didn't know if I was going to use it, but when I tested it out on a couple, it was perfect. I have never had to file so many extentions in my 30+ years doing taxes as I did this year. I was very happy to see the bult extentions and that it worked flawlessly.

How did the Trust determine who the $5,000 would be awarded to? Any relationship between the student and the trust? Did the scholarship specify what the money could be used for?

I don't like the practice of criticizing other professionals because it's not, well, very professional. When a client brings me a return prepared by someone else, I never say "that person messed up," but maybe something like "s/he did this differently than I do" or the code changed that year or whatever. We never know if the prior person had all the docs the client brings us, or if the client answered questions the same way. I respect letters after names, like EA and CPA, because I know how hard it is to earn them. And all of us, letters or not, make mistakes. Think of McDonald's commercials. They never even mention competitors (unlike their competitors) but just highlights how wonderful their own offerings are. I disagree and have only been there maybe once in five years because it was the only quick place around, but that doesn't mean they don't know how to cook.