TexTaxToo

From the instructions, Form 1310 with Box B checked is only required for an amended return, not the original return:

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Check the box on line B only if you are the decedent’s court-appointed or certified personal representative claiming a refund for the decedent on Form 1040X  ... or Form 843 ...

Certainly, if the student isn't required to file.  If the student will have to file, you have to look at the phaseout range of the AOC (above 160K MFJ, 80K other).  At some point above that, the benefit to the parent will be offset by the cost to the student.

Also note that the first $2000 of expenses generates a 100% credit, but the next $2000 only 25% credit, so a combined marginal rate above 25% for the student would make it not worthwhile to claim more than $2000.

Yes, and the earnings are prorated.  See Pub. 970, chapter 7 for the calculation.

It's not really a safe harbor - for off-campus housing it's also the maximum - students living in a lavish penthouse cannot use the full actual costs, only the COA allowance.  (For on-campus housing, you can use actual costs, if higher.)

See https://www.law.cornell.edu/uscode/text/26/529#e_3_B_ii

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The amount treated as qualified higher education expenses by reason of clause (i) shall not exceed—

(I)the allowance (applicable to the student) for room and board included in the cost of attendance (as defined in section 472 of the Higher Education Act of 1965 (20 U.S.C. 1087ll), as in effect on the date of the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001) as determined by the eligible educational institution for such period, or

(II)if greater, the actual invoice amount the student residing in housing owned or operated by the eligible educational institution is charged by such institution for room and board costs for such period.

Yes, taxable scholarships count as unearned income for the kiddie tax, so if unearned income is more than $2,500 and they are otherwise subject to the kiddie tax, they have to file Form 8615 - but only if they are required to file.

For example, a student who is a dependent (so they cannot claim AOC for themselves), and has only scholarship income, would not have to file unless the scholarship income is over $13,850.  But once they hit the filing requirement, any amount over $2,500 would require Form 8615.

Employers can make contributions to an employee's HSA, and employees can make pre-tax contributions through a cafeteria plan.  These are treated the same and both are reported as code W on Box 12 of the W-2 and will generally flow through automatically to the 8889 line 9 - no adjustment on the tax return can be taken for these.

If the employee makes additional (post-tax) contributions, they are reported on line 2 of Form 8889 and an adjustment may be taken.

Taxable scholarships count as earned income for purposes of the filing requirement, but once the filing requirement is met, they do not count as earned income for other purposes (such as EIC) - unless they are reported on a W-2.

Under the FAFSA Simplification Act of 2020, which went into effect for the 2023-2024 school year, schools are required to compute a Cost of Attendance (COA) for each category of student (broken down into components), and must publish these on their website (it was optional before, though many did publish it).
 
Note that schools may (but are not required to) adjust the published COA on a case-by-case basis for special or unusual circumstances, so the taxpayer may be able to obtain a different COA for their specific situation from the school (be sure to get it in writing).
 
Also, under the new law, the "room and board" component was renamed to "living expenses", which may also be listed as "food and housing".

Some courts have ruled that counting every individual wager that wins during a gambling session is unreasonable, as they are not really an accession to welath.  The IRS has proposed, first through Chief Counsel Advice Memorandum 2008-011 Reporting of Wagering Gains and Losses (https://www.irs.gov/pub/irs-utl/am2008011.pdf) and later in Notice 2015-21, a safe harbor for netting certain winnings and losses on a "session" (or daily) basis. 

This is likely what the previous preparer is relying on. However, the proposals were never finalized or put into effect (and applied only to slot machines), so you use them at your own risk.  I'm curious if anyone here is relying on them?

Sch. 1, line 8r is specifically for taxable scholarships and grants.  It no longer goes on Form 1040 line 1 as that is for earned income only.

It's probably too late to call, but they can try.

https://www.irs.gov/faqs/irs-procedures/refund-inquiries/refund-inquiries-18

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If the return hasn't already posted to our system, you can ask us to stop the direct deposit. You may call us toll-free at 800-829-1040, M - F, 7 a.m. - 7 p.m.

I think it depends on what the fees are for.  "Concierge" fees which simply provide access (quicker appointments, a direct phone number, etc.), but where the medical care is billed separately in addition to the fee, are not considered to be for medical care and are not deductible.

But "Direct primary care" generally means the fees include medical care, so they are likely deductible.  The IRS has proposed regulations (REG-109755-19) which if finalized, would indicate when they are deductible, but I don't think they have been finalized.

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The proposed regulations define a “direct primary care arrangement” as a contract between an individual and one or more primary care physicians under which the physician or physicians agree to provide medical care (as defined in section 213(d)(1)(A)) for a fixed annual or periodic fee without billing a third party.

Look up qualifying models here: https://fueleconomy.gov/feg/tax2023.shtml

But not every vehicle qualifies (even of the same model).  For example, MSRP must be <= $55,000 for sedans.

They don't actually have to use the distribution for medical expenses.  There is not even a requirement that they take the distribution before paying the expenses. They simply have to have expenses that qualify for the medical deduction in excess of 7.5% of AGI (whether or not they itemize).  So you can count all qualifying expenses, deduct 7.5% of AGI, and claim the remainder on Form 5329.

What is his residency or visa status?

Perhaps see: https://www.irs.gov/individuals/international-taxpayers/employees-of-foreign-governments-or-international-organizations

You should read it all, but highlights are:

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Many agreements that establish international organizations contain a provision that may exempt your compensation from U.S. income tax. If you are employed by an international organization in the United States, first look to see if the international agreement establishing the international organization you are employed by has such a provision and whether you qualify under it. Generally, these provisions will not exempt compensation of U.S. citizen and resident alien employees.

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If the international agreement creating the international organization you are employed by does not contain a tax exemption provision and you are not a U.S. citizen (or if you are a U.S. citizen but also a citizen of the Republic of the Philippines), you may be able to exempt your compensation under U.S. tax law. To claim the exemption, you must be able to demonstrate that you meet the requirements of U.S. tax law. ...

Continue reading the instructions.  There are two parts to 199A income which are computed separately (for carryforward purposes):

• Qualified Business Income (which excludes PTPs)
• Qualified REIT dividends and Qualified PTP Income/Loss

From the code:

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The term “building envelope component” means—

(A)any insulation material or system, including air sealing material or system, which is specifically and primarily designed to reduce the heat loss or gain of a dwelling unit when installed in or on such dwelling unit,

(B)exterior windows (including skylights), and

(C)exterior doors.

Windows and doors must meet specific energy star requirements, so generally only the more expensive ones qualify.

"Insulation" has the least requirements (must meet IEEC standards) and manufacturers are claiming that things like window shades qualify, but from the instructions for Form 5695:

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A component isn't specifically and primarily designed to reduce the heat loss or gain of your home if it provides
structural support or a finished surface (such as drywall or siding) or its principal purpose is to serve any function unrelated to the reduction of heat loss or gain.

 So I think you are out of luck.

They are not eligible for AOTC if they already had their first 4-year degree at the beginning of the tax year (the number of years they actually took to obtain it doesn't matter).

There would only be 8K of income if they do not claim a credit and the scholarships could be used to pay tuition and other qualified expenses. You subtract all qualified expenses from the scholarship to get the taxable amount. There would only be 34K of income if the scholarship may ONLY be used for living expenses and CANNOT be used to pay tuition, etc., which is rare.

If they claim LLC, they would have to allocate more of the scholarship to living expenses, increasing the amount of income, to get the credit.  But there would be no reason to allocate more than another 10K or 18K total , so 18K would be the maximum taxable (again assuming the scholarship allows either - and you have to make sure they actually had that amount of living expenses before allocating it thus).

Claiming the LLC may or may not be beneficial, depending on income.  Since LLC is not refundable, they would have to have enough other income to take full advantage of the credit, but the marginal rate would have to be less than 20% (since the LLC is a 20% credit).

One does not have to be in a degree program to claim the LLC, but if not, the courses must be taken "to acquire or improve job skills".

I think the "collapse" in housing has little to do with taxes and everything to do with interest rates.  No one wants to give up a 3-4% mortgage unless they have to.  On the other hand, those complaining about 7% rates must not remember the 80's when rates were 13% or more.

As for tax items not adjusted for inflation, we have the $300/$600 election for the foreign tax credit.

The instructions were updated in January to say that even if they are filing jointly, spouses with separate main homes can take the maximum credit on their respective homes, and can file two Forms 5695 in that case.

Neither the law nor the instructions are completely clear, but I think the rules on joint occupancy would apply to spouses filing separately with the same home - that is, they could pro-rate the credit based on how much they individually paid compared to the total cost, but the total credit would be limited to the maximum per item.

Simplest would be to give to one or the other as Judy and Marilyn suggest.

Scholarships and grants are only excluded from income if used for qualified expenses (e.g., tuition, fees, books, etc.).  If used for living expenses, they are taxable.  Many scholarships are restricted and can only be used for qualified expenses - there is no option to shift them to living expenses (which would allow some of the qualified expenses to be used for AOC or LLC).

Pell grants are unrestricted.  You can treat them as being used for living expenses (even if they were actually sent directly to the school and used for qualified expenses - money is fungible).  That part then becomes taxable to the student, but any qualified expenses that are now treated as being paid by other funds can be used for AOC or LLC, which often more than offsets the tax.

For other scholarships and grants, there should be documentation saying they are unrestricted or can be used for living expenses.  A good hint is seeing box 5 greater than box 1.

You do have to combine the two forms, but you don't necessarily "add" column B.  You add the amounts in Columns A and C. Form 8962 has instructions for Column B, which are different if the forms came from different states or the same state.  You do add Column B for different states, but for the same state, you may need to recalculate the amount (at https://healthcare.gov/tax-tool if the state doesn't have it's own exchange).

20 hours ago, Margaret CPA in OH said:

The instructions require that they be for your 'main home'

Except for fuel cells, the 25D credit is not just for the main home.  The solar credit is for any "property which uses solar energy to generate electricity for use in a dwelling unit located in the United States and used as a residence by the taxpayer."  So vacation homes, etc. qualify.   Only for fuel cells does it say "principal residence".

The Form 5695 instructions say:

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A home is where you lived in 2023 and can include a house,
houseboat, mobile home, cooperative apartment, condominium, and
a manufactured home that conforms to Federal Manufactured Home
Construction and Safety Standards.

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Qualified solar electric property costs.

The home doesn't have to be your main home.

Isaac Asimov envisioned this in a sci-fi novel in 1957.  From https://en.wikipedia.org/wiki/The_Naked_Sun

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Asimov portrays in The Naked Sun a world focused on avoiding physical contact with other people.

....

Face-to-face interaction (referred to in the book as "seeing") is seen as a repugnant chore. 

My take is that there is only one calculation per student/beneficiary.  After subtracting scholarships and expenses used for AOC or LLC from the qualifying expenses, divide the remaining expenses by the total distributions (from both 1099-Q forms) to get the percentage of earnings that is non-taxable.  Apply that percentage to the earnings on each 1099-Q separately to get the non-taxable amount for that 1099-Q.  The remaining earnings on each are taxable to the person whose SSN is on that 1099-Q.

If the distribution went directly to the school or to the beneficiary, the beneficiary's SSN should be on the 1099-Q, even if owned by the father.

And note that room and board is a qualifying expense for QTP (529 plans).  Even if the student lives at home, the school must publish a Cost of Attendance (COA) on their website with an allowance for that situation.  The FAFSA Simplification Act which went into effect for the 2023-2024 school year requires that the allowance be non-zero for a live at home student.  Also, "room and board" was renamed to "living expenses (including food and housing costs)"  so the COA may list it that way - I've seen some listed as "Living expenses" and some listed as "Food and housing".