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Ed Exp and Credit


Randall

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Am I correct?   Tuition and other qualified education expenses charged on student's account.  Room and board amounts also charged on student's account.  Scholarship and grant money deductions and parents' payments shown on student's account.  I must assume the scholarship and grant money applies to the tuition and other qualified ed expenses while the parents' payments apply to the room and board.  Therefore, no qualified ed expenses available for the education credits. 

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I believe you are not correct.  I'm sure there are private scholarships that do not allow the funds to be used for room  board, but the article indicates that Pell grants can be applied differently than the way applied by the institution. Please see the following link

https://www.irs.gov/pub/irs-utl/Pell%20AOTC%204%20pager.pdf

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2 hours ago, Gail in Virginia said:

Just remember, if scholarships are used for living expenses such as room and board, they are probably going to be taxable as income.  That doesn't mean you should not classify them that way; just be sure to look at all of the ramifications.

That's right.  Living expenses are living expenses.  And if there is much whining from the client: "I will take the scholarship and gladly pay the tax, it's a better deal than this career, wanna do it that way?"

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I've found out that the scholarships are allowed to be used for other than tuition such as room and board.  Can we assign the scholarships to room and board, apply payments and loans as parents education expenses for purpose of taking the education credit on the parents' return?  Then report the taxable scholarship on the student's return.  He has no other income and the scholarship amounts minus standard deduction results in no tax (no tax at state level either).  Is this allowable?  It doesn't seem right?  Scholarship amounts are reported as W2 income.  Would he be subject to SE tax?

 

 

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54 minutes ago, Randall said:

I've found out that the scholarships are allowed to be used for other than tuition such as room and board.  Can we assign the scholarships to room and board, apply payments and loans as parents education expenses for purpose of taking the education credit on the parents' return?  Then report the taxable scholarship on the student's return.  He has no other income and the scholarship amounts minus standard deduction results in no tax (no tax at state level either).  Is this allowable?  It doesn't seem right?  Scholarship amounts are reported as W2 income.  Would he be subject to SE tax?

 

 

Taxable scholarships go on recipient (kid's) return, on Line 7, note at left "SCH 500" or (whatever amount is).  No, not subject to SE tax.

 

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7 minutes ago, RitaB said:

Taxable scholarships go on recipient (kid's) return, on Line 7, note at left "SCH 500" or (whatever amount is).  No, not subject to SE tax.

 

^ that, but if the student is a degree candidate, only include the amount on line 7 that is for other than tuition and course-related expenses.

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7 minutes ago, jklcpa said:

^ that, but if the student is a degree candidate, only include the amount on line 7 that is for other than tuition and course-related expenses.

Well, what if kid got 3,000 in scholarships that was designated to be used for tuition, and tuition was $2,600?  Wouldn't $400 be taxable scholarship on kid's Line 7?

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11 minutes ago, RitaB said:

Well, what if kid got 3,000 in scholarships that was designated to be used for tuition, and tuition was $2,600?  Wouldn't $400 be taxable scholarship on kid's Line 7?

Yes, of course. I was just trying to say that 100% of the scholarship might not go on line 7, not the part actually for the tuition.

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