Tax Help: What Do I Do With a 1098-T? What is a Form 1098-T? How Do I Get One?
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- Опубликовано: 31 май 2024
- The Form 1098-T Tuition Statement is a very important tax form for college students. It is required to claim valuable education credits, such as the American Opportunity Tax Credit and the Lifetime Learning Credit. You can get one from your College, and you should absolutely use it to prepare your tax return. Every undergraduate college student should use their Form 1098-T to claim at least $800 of the American Opportunity Tax Credit FOUR times, if possible. Many tax preparers don't know how to claim this education credit correctly when scholarships or grants are involved.
Watch this for More Details About the Tax Benefits for Students
• What Tax Benefits and ...
Costly Tax Filing Mistake: Not using your Form 1098-T
• Costly Tax-filing Mist...
Costly Tax Filing Mistake: Claiming a Partial American Opportunity Credit
• Costly tax-filing mist...
Costly Tax Filing Mistake: Relying on TurboTax or other CPA Software
• Costly Tax-Filing Mist... 
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You may contact me about your specific tax situation at this email:
Steve Hunt CPA at College Tax Refunds. com
Remove all spaces and replace "at" with @
This is so helpful and educated video thank you so much for helping humans!
Helping "humans"? Are you a bot or an alien? 🤪😉🤣 just kidding. You're welcome! I'm glad it helps.
I recently filed my 2021 taxes and the AARP tax preparer did all the errors you just stated in your video. Which I kind of knew he was wrong but b/c I was not sure and needed time to research I allowed and he put "$1" for the adjusted qualified education expenses b/c he said her scholarships/grants exceeded her qualified expense amount. And looking back at my 2020 taxes just as you said even though the 1098T was provided I did not receive the credit. Your video is great with doable instructions but I do prefer to have a qualified and knowledgeable CPA make the corrections. Will be contacting. Thanks!
Thanks for commenting. Please reach out at CollegeTaxRefunds.com/contact
Unfortunately, AARP and VITA tax preparers are trained very little on the subject matter.
Very informative.thank you for posting this video ❤
Thank you for watching and commenting.
Thank you so much!!
You're so welcome. Thanks for watching and commenting.
This is really good info, especially since we are just starting out with the 4 years of college. Thanks. Do you have one that is more recent? Or is the info not that different from year to year. I'm watching this for 2023 tax return.
I do not have a more recent video yet. The laws around this haven't changed in the last few years, but people still do it wrong.
Thanks man
That's great camera quality.
Thanks! I appreciate the comment and that you are watching.
I have two goals with my kids college. 1) Take advantage of all tax credits. 2) Minimize the amount of private loans they have. 3) Wait as long as possible for them to borrow money because of accrued interest. I have enough in a 529 to pay for the entire first year which would mean delaying borrowing. Can you still claim education tax credits if you use a 529? If not how much would you recommend paying out of pocket each year? It sounds like maybe pay 2500 in cash and then the rest with the 529? Should we just apply the 529 divided by 4 each year and borrow starting in the freshman year?
Thanks for this amazing, intelligent question. Sorry for the slow response.
529 plan withdrawals cannot be claimed as taxable income like scholarships can. So, you are correct that in order to take advantage of the tax credits (which you definitely want to do), you should not pay for all of the student's qualified tuition and related expenses with tax-free money. You should use some kind of taxable income/taxable scholarships OR loans to pay a portion. However, the exact amount that is going to get it the best result will be tricky, based off your taxable income. You might want to consult a tax accountant or contact me at CollegeTaxRefunds.com/contact. The amount to pay with taxable income/taxable Scholarships or student loans will be between $2000 and $4000.
Unless I'm mistaken, subsidized student loan interest does not start accruing until graduation, after the deferral period.
Steve is awesome.
Thanks for watching and commenting, Max.
VERY IMPORTANT: Scholarships & grants that are NOT taxed must reduce the qualified tuition & related expenses available to claim the valuable American Opportunity tax credit. If the STUDENT (always the STUDENT, never the parent) includes some or all of the scholarships in their taxable income, then those taxed scholarships do not reduce the qualified expenses for purposes of claiming the American Opportunity tax credit. The parent claims the education credit if the student is a dependent, but the STUDENT is still ALWAYS the one to report and pay tax on the scholarship on their own tax return. The parent never includes the scholarship money on their taxes.
Also, the amount of
scholarship to include in the student's income depends on the student's qualified educational expenses, the total scholarships received, the student's federal and state tax rate, and the student's other tax credits (like the earned income credit, additional child tax credit, retirement savings credit, net premium tax credit, etc). It's truly a complicated calculation, and the results may be rejected by the IRS if you don't do the calculation correctly. Just remember that qualifed tuition and expenses must be reduced by all tax-free educational assistance, and if you have questions calculating the exact amount of scholarships that should be included in the student's taxable income, please reach out to me at CollegeTaxRefunds.com/contact.
This is simply a extremely complicated area of tax law that many people (including many IRS agents and CPAs) get wrong. I suggest that if taxpayers don't thoroughly understand the pages of Publication 970 that talk about the American Opportunity tax credit and scholarships that they get assistance from CollegeTaxRefunds or from someone who does thoroughly understand those pages. Getting it wrong causes IRS challenges. The IRS will even challenge you 25 percent of the time even when you do it right!
This has been very helpful - thank you! To review what I think you said (please confirm or correct), it is typically advantageous for parents to include some scholarship money as taxable income on our 1040, to render us eligible to receive AOC. Since you wrote that $2000 scholarships would need to be added to receive 800 in credit, I’m assuming if we are shooting to receive 2500 in credit we should claim 7812.5. And in 15% bracket we would then be paying 1,172 on that additionally reported income for a net gain of 1328. Sound right? I’m a bit confused by you saying the scholarship income should be reported by the student only, but seem to say that the parents can get the credit, and the student needn’t file taxes if their income is below certain filing threshold amounts (do you have a good video to direct me to about these thresholds - when my child made $4950 per W2, but may need to add some scholarship amounts to qualify for maximum AOC?). Thanks for all the help!
Steve, unfortunately, there are many things you've said that are incorrect. I would love to clarify and help. I recommend you reach out to me directly at CollegeTaxRefunds.com/contact. Firstly, the parent NEVER reports the scholarship as income; it's ALWAYS reported by the student, even if the parents claim the tax credit. Secondly, the amount to include in the student's income is not a ratio or a number that can be calculated for everyone without knowing the exact specifics of the student's tax situation. I'm sorry I wasn't clear about these things. Again, I'm happy to help, or I encourage you to study pages 14-17 of IRS publication 970.
If your child made $4950 and will include some scholarship as taxable income, I using IRS Interactive Tax Assistance tool to see if there is a need to file a return.
@@almaur703 good suggestion
Hello, sir. I have a question regarding the taxable grants. My grants were more than the total I had to pay, and i got the refunded check to myself, but i now understand that the money is taxable. With that being said, do i still have to file it to the IRS even if it's under 10k? Would I get in trouble if I didn't file? And could i get this AOTC because this year they sent me the 1098 T form?
Most CPAs will tell you that if you don't need to file a tax return because of money you earned this year, then you also don't NEED to file a tax return because of the extra scholarships you received. HOWEVER, you might WANT to file a tax return and report a portion of the scholarships as taxable so that you can claim the valuable AOTC. It depends on several things, like whether your parents can claim you as a dependent, how much money you made last year from a job, whether you borrowed any student loans, how much scholarships you received, how much your tuition was, and several other factors. Many students who benefit from reporting their scholarships as taxable and claiming the AOTC get a refund of $800-1300. If you would like me to look at your specific situation, please email me at (Steve Hunt CPA at College Tax Refunds.com) -- remove all spaces.
Loved the video but am even more hesitant to go to VITA to help me with my taxes. If you don’t mind, I’d like to run this by you to further educate myself before I make that appointment.
I am disabled and am not required to file taxes but do so for FAFSA purposes. I file as HOH and claim my college student as a dependent, she has never filed taxes. Her scholarships and grants are almost twice the reported QTRE on form 1098-T. So my understanding is SHE will need to file her own taxes this year and claim a portion of the scholarship funds as income in order to get the AOTC, correct? How small can the claimed portion be to qualify for the credit and not look dishonest? She worked a summer job so she has a W-2 this year so planned to file taxes anyway. Should I still file as HOH and claim her as a dependent even if my disability income is not taxable? Since I claim my daughter as a dependent at some point when filing on the tax prep site it asks if anyone in the household goes to college and then asks me to enter form 1098-T info. It then asks me how much of the grants and scholarships were not used for qualified educational expenses and should be considered income. I have tried to start over several times to totally avoid form 1098-T with no success. I believe I have to claim my daughter as a dependent for FAFSA purposes but can’t get past 1098-T. Am I also supposed to do something with this form? I am obviously beyond lost at this point. Thanks so much for your time and consideration.
Thanks for watching. If you provide more than half of the total financial support for your daughter, then you should claim her as your dependent. And if you do your taxes right, there's really no way to "avoid" the 1098-T (but many people choose to leave the 1098-T off, even though it's technically incorrect AND it's often a costly error). However, you can do as you've discussed, reporting some of her scholarships as taxable income on her tax return, then you'll be able to claim the American opportunity tax credit on your tax return. The amount of scholarship to report on her taxes depends on her tuition, books, and total scholarships. I would be able to help you more specifically if you email me at (Steve Hunt CPA at College Tax Refunds. Com) - remove all spaces and replace at with @
trying desperately the get credit(s) you spoke of on the video form 8863. our scholarships are more than the tuition paid. trying to find this wages section you spoke of starting at 12:41. is this applicable for 2023 taxes???? I am using a tax software online, and I am not finding a way to enter the amount in. there is no "other income" section on my software.... Also, since I am claiming my child as a dependant on my taxes, do I add the 1098-T on my taxes, or should they??? Thanks!!
All the excess scholarships + $4000 must be included in the taxable income on your child's tax return. It's reported on Schedule 1 on the line that says "taxable scholarships." I don't know how to do it on your tax software, I'm sorry. It actually may not be possible with some software. After the student includes the income on their taxes, the parent can claim the credit on their taxes.
Hey, can you advise if it’s better to pay off my wife’s college fees off pocket or should i take an education loan ? Which one gets best savings ?
Thanks for watching and for the question. This is a complicated question that depends on things I don't know, like your financial situation and current sources of income and wealth, the availability of scholarships and grants, your wife's future income potential, the availability of loan forgiveness if your wife takes a certain kind of job, and the rate you can get on a student loan. Student loans are a huge challenge and regret for many people. They can last for years and suck away a large amount of your income. But sometimes you can get a student loan rate that is less than 2 percent, which can make it all much more reasonable. In short, I can't answer your question without a lot more specific information about you, but I can tell you that generally it's always better to avoid debt that you yourself must pay back. When you take on debt, you become the servant you the bank, and a portion of your earnings go to your master, the bank, for many years of your life-and you can't quit your job or stop serving your master or they will come take away your home and your other assets. Avoid debt if you can. If you want to save money and be financially healthier in the long run, do what you can to qualify for scholarships, grants, fellowships, tax credits, and other forms of education assistance and income before you take on debt. Student debt is usually only wise for students who have no other means of paying for college AND they have a high likelihood of getting a high paying job when they graduate, like medical or law school students. Their future income will be high OR else they can get some of their debt forgiven by taking a lower-paying, service-oriented job.
Hello. The parent only claims a portion of the scholarship in order to receive the full AOC bec the allowable school expenses are less then the scholarship. The college student needs to file taxes on the rest. Where in turbo tax is it listed? Under W-2 (what would the employer number be?), or deductions and credits (it asks for the 1098-T full amounts already entered on parents taxes), or unearned income (not allowing to be entered)? Thank you
The parent never claims ANY of the scholarship. All taxable scholarships are reported on the student's taxes. Qualified expenses must be reduced by any tax free assistance received. I don't know where to enter it in TurboTax, as I can't stand that program; it causes millions of people to miss thousands of dollars every year. My guess is the taxable scholarship amount would be entered on an adjustments to income screen where there might be a box for "taxable scholarships." If you find it, the scholarship will show up on the dotted line next to "wages" on the tax return. Do not enter the same scholarships into the 1098T screen.
Hi! I would greatly appreciate some advice. I have been going to college since 2016, graduated from community college in 2021. 2016 - 2021, I never reported my scholarships and pell grant refunds as taxable income. I think I gave my tax preparer the 1098-T form some years, but it did not seem to result in anything. A majority of it was spent on books, supplies, uniforms etc but it's hard to say how much of the money exactly was used for qualified tuition and related expenses. Is this a major issue that I did not report refunds as taxable income? My main concern is owing money to the IRS.
A few other questions:
When I look at my wage and income tax sheets, the amount of money for scholarships and grants is a lot more than the line that says the amount for qualified tuition and expenses. Some years, the qualified tuition and expenses line is also $0.00. I don't even know if these two lines are related and what it means, but does it make it look like I got a lot of scholarship money that should have been reported as taxable income?
Why would some years show $0.00 amount in the qualified tuition and related expenses line?
Also important to note that I was a dependent of my mom for a few tax years up until 2019 I believe.
You explain things so well and I had no idea about the american opportunity tax credit - I'm not sure I even qualify since I have never reported Pell grants as reportable income. From watching your videos, I see how complex it can be to calculate - so confusing!
I am also filling out 2023-2024 FASFA and question 40d asks how much taxable college grant/scholarship aid I reported to IRS as income. By not reporting previous grants/scholarships as taxable income, does it also affect future financial aid amounts I receive?
If I understand correctly, I dont think I had enough left over (refunds) in what could be considered taxable income to be in the $3,000 - 5,000 range to qualify for the AOTC credits.
Thank you!
I apologize for so many questions and if these questions have been answered in other threads/videos as well
Hey, sorry for my slow response. That's a lot of questions. Most importantly, you're probably not going to get into trouble or owe tax for not reporting your excess scholarships as income.
However there's a possibility you could have received a $800-1000 or more refund on your taxes (or on your parents' taxes) if you had reported some of your excess scholarships as taxable income. Unfortunately, I can't tell you whether that's the case without knowing about a dozen numbers from your taxes and your parents' taxes.
I don't know why your tuition and related expenses is showing $0. That's a question for your school. That might be the way they indicate that your scholarships were more than your tuition. (It's not a correct method, in my understanding, but some schools do it that way.)
If you had included scholarship in your income, it would NOT affect your Pell grant eligibility. They want to know what your income is and what part of that is scholarship so they can back it out from your income when you apply for grants.
Let me know if you have more questions
Thanks for the tips. I didn't take this credit the first year because my son got all tuition paid for by scholarships, but now I will claim it the next four years. I presume I have to report the taxable scholarships (up to $2500) on my return ( son is dependent) not my son's return, correct?
That is not correct. Your son's scholarships are reported as taxable on HIS tax return. The student ALWAYS reports the taxable scholarships that they received on their own taxes. The parents get to claim the education credit on THEIR taxes, however, if they are legally able to claim the student as a dependent.
How do u determine how much of your fellowship or grant to claim on the taxable wages line? Can i just put any amount; like $4,000?
Thanks for watching and asking the question. It challenging to explain a full answer in the comments. I have other videos on the channel that explain this, but I want to do a better one. It will be long. You cannot put just any amount. You must put enough of your scholarships (I'm including fellowships and grants when I say scholarships) on the wages line to allow you to claim the education credit, but if you put too much of your scholarships in wages, it can reduce your tax refund, especially if you're getting credits like an earned income credit, retirement credit, dependent care credit, or advanced premium tax credit. Whatever financial aid you DON'T include in wages must reduce your qualifed education expenses, thereby reducing your education credit. A quick rule of thumb (that doesn't apply to everyone) is this:
1) start by putting only as much financial aid in your wages as you must put in wages to claim $2000 of qualified education expenses on form 8863. That means if you had at least $2000 more qualified education expenses than financial aid, you don't need to include any scholarships in income. But if you had less than $2000 of qualified expenses after subtracting your otherwise tax free scholarships, try including enough of your scholarships in income to increase your eligible qualifed expenses to $2000. For example, if your scholarships are $5000, and your qualified tuition and related expenses are $4000, you have NO eligible expenses ($4k-$5k < $0). You must include $3000 of scholarships in income in order to claim just $2000 of qualified expenses.
2) Check to see if your tax refund went down or the tax you owe went up after you did that. If it did. Reverse it. Don't include any scholarships in income or take the credit at all. You're done.
3) If your tax refund went up or your total tax went down, check to see whether your earned income credit went down. If you had earned income credit before doing step 1, and it went down, then you're done after claiming $2000 of qualified expenses and including the related scholarships.
4) If your earned income credit didn't decline, or if you never had an earned income credit, now try including as much scholarship in your income as necessary to claim $4000 of qualified expenses. In the example given above, you must include all $5000 of your scholarships in wages, so that you can claim all $4000 of your tuition towards the education credit. But in another example, if you have $5500 of qualified expenses and $5000 of scholarships, you must include $3500 of scholarship in your wages in order to claim $4000 of qualified education expenses.
5) If the last step did not cause your earned income credit to go down, or if you never had an earned income credit, stop here you're done. Claim the full American opportunity tax credit using $4000 of qualified expenses.
6) If step 4 caused your earned income credit to decline, start reducing the amount of scholarship you include in your income and the amount of qualified expenses your claim in $10 increments until your at a level of scholarship/expenses that does NOT decrease your earned income credit. You will end up claiming somewhere between $2000 and $4000 of qualified expenses, and you will report the required amount of scholarship in your income that is necessary by law and no more. This will give you the lowest taxes and the highest refund possible.
Be sure that you reduce your qualified expenses by every dollar of financial aid NOT included in taxable income.
Be sure you don't try to claim the American opportunity tax credit more than 4 years for the same student. Be sure you don't claim the credit in any year unless the student was an undergraduate student working on their first degree for at least one semester of that year.
Be sure that you ALWAYS claim the credit on the tax return of the person who claimed the student as a dependent.
Be sure you ALWAYS report the taxable financial aid on the STUDENT'S tax return, never on anyone else's tax return, regardless of who claims the student as a dependent.
I hope some of that was clear.
Is 1 normally empty. All I have is the scholarships or grants is with numbers. I payed fees and I payed for things for college along with books,laptop and fees. Do I have to call my school about that? I tried to ask about it with my taxpayer but he told me no. Now this year I’m doing my own taxes with free tax USA because I been paying stuff for school for last few years and never claimed it.
Thanks for the question. I would definitely want to know why box 1 is empty. If you paid for tuition, even with scholarships or loans, or should be in that box. You cannot claim the American opportunity tax credit (worth up to $2500) unless there's a number in that box. I would try to figure out from your school why there's not a number in that box and what that number should be. If possible, have them reissue the 1098T with the correct amount in that box.
I have a complicated tax issue in Florida. Single parent with no income who claims (previously a minor but now 19) a dependent child on taxes and for Family Medicaid. Dependent is filing taxes as a full time student who also works part time and I claim dependent. This past year dependent has the Pell Grant and additional grants and scholarships and received the 1098T form.
Who can assist us in filling our taxes? It is overwhelming to figure this all out.
I am happy to help you. Student taxes can be extremely complicated, and many people fail to claim the credits they are eligible for. Please send me an email: Steve Hunt CPA at College Tax Refunds dot com.
Just found this video. Helpful information. What if the amount in box 1 includes $ paid by a 529 account set up by the grandparents? The student, however, would be claimed as a dependent on the parent’s return. Does it matter?
If the entire amount in box 1 was paid by a tax-free distribution from a 529 plan, the American Opportunity tax credit cannot be claimed for the student. The credit can be claimed only if at least some amount of the qualified tuition and related expenses was paid for with taxed earnings. Generally, you can claim that tax-free assistance was used to pay for housing or other non-qualified expenses. Alternatively, you can pay tax on the scholarships and grants, turning them into taxable income. However, there is no way to use 529 distributions for anything other than qualified expenses, and there is no way to include those distributions in income. So, a 529 plan is unfortunately one way to prevent students from claiming the American Opportunity tax credit.
Hi I have a quick question, I'm 19 and I am currently unemployed and I am dependent on my parents. On my 1098 it says I received over 7k in grants from Fasfa and the ARP so my entire 6k tuition was paid and I got some money as a refund since I over paid. Do I still have to fill out a tax return? And if so can I choose to do it myself instead of my parents claiming the credit? I have never done taxes before but want to start so when I am independent and I am not so confused about everything.
You cannot be a dependent of anyone to claim the American opportunity credit. However, your parents can claim the credit and give it to you or split it with you. But, you need to be a qualified enrolled student, and they need to qualify based on their income. Finally, in order for them to claim the full credit, you will need to choose to report $3000-5000 of your grants as TAXABLE on your tax return. If you had no other income, that won't even result in any tax for you. Only then can your parents claim the credit.
It's extremely complicated
I recommend you reach out to me at Collegetaxrefunds.com/contact
Hi, my parents are gooing to a tax preparer very soon. I am a dependent and I was wondering if it’s okay to include my 1098-T form for 2022 even thought I did not include my past two 1098-T forms from 2021 and 2020 in the previous tax returns? Basically, Is it okay for my third 1098-T form to be the first one I actually give to the tax preparer? Also, I do not have a printer so is it okay for me to save the form on drive and have the tax returner print it?
Thanks for the question. The IRS won't care that your parents waited until 2022 to claim your education credits for the first time. They are happy not to pay you the $1000-2500 that they owe you for each of the other years you were a student. But your parents may want to seriously consider amending their tax returns for 2020-2021 to claim that money. The IRS shouldn't get to keep it. If you happened to receive scholarships and grants that were within $4000 of the amount of your tuition, or if your scholarships and grants were MORE than your tuition, there is a good chance that your tax parents' tax preparer will not know the correct way to include some of your scholarships and grants in YOUR taxable income so that your parents can claim the very valuable American Opportunity Tax Credit on THEIR tax return. If you or your parents find out after you give the tax preparer your 1098-T that they are NOT claiming AT LEAST $800 on the "American Opportunity Tax Credit" line of the tax return, please be sure to email me to see if we can get your parents some more money for all three years: 2020-2022. Most students with scholarships and grants miss an average of $1300 every year. My email is (remove all the spaces and change the "at" to @)
Hey Sir, quick question on the idea of claiming the Credits, if your parents haven’t claimed taxes before or is lower than the desired income. Would you then claim as an independent in doing one’s own tax return?
Thank you!
Thanks for the question. You are an independent only if you provided more than half of all of your own financial support with your own earned income. So, if you have a job, and no one else is helping you pay for your housing, food, insurance, transportation, tuition, etc., Then you can claim yourself as an independent. Otherwise, whoever is providing more than half of your financial support can claim you as a dependent
@@collegetaxrefunds Hi Sir Brooklyn here returning here to just acknowledge the help and assistance of undergoing this process for me. With much respect, for your help! I have heard some feedback on going about this and I thank you again🙏🏾!
@@brooklynnyc thanks!
I'm not a dependent. I go to a technical college in Florida and i have a FAFSA Pell Grant. I received my 1098-T but when I finished filing my taxes I don't see anything about my education credit. I use H&R Block and it said it will tell the IRS that I'm a student but it didn't let me put any info from my 1098-T form. My 1098-T form in Box 1 says "payments received for qualified tuition and related expenses is $57.85". Do I need to file an amended return and will I get education credits added to my tax refund?
Are you going to have any more years of higher education with a larger amount of tuition?
I ask because your $58 of tuition should get you a $23-58 education credit on your taxes, which is certainly not worth the work to prepare an amended tax return. Additionally, you only get to claim the education credit four times, and it's worth up to $2500, so you should wait and claim the credit during the four years when you pay the most for college.
However, my final question is, did you really only pay $58 in tuition, or is that what was left to pay after applying your Pell grants? If you paid thousands of dollars in tuition, but it was all covered by Pell grants, NOW you should file an amended return, where you report $4000 of your Pell grants as taxable and then report $4000 of tuition. This will result in a $1000-2500 credit.
Thank you for the video but I am still so confused does box 1 show you how much you will receive back? How do I know how much I will get
Box 1 shows the tuition you paid. Depending on your other income, your scholarships, your book expenses, your earned income credit, and so many other factors, you can use that number to claim the American opportunity tax credit, which is worth up to $2500 cash back on your tax return. If you have at least $4000 more tuition in box 1 than scholarships in box 5, almost any CPA or free tax program will help you correctly claim this credit (or your parents can claim the credit if you're a dependent). But if your scholarships in box 5 is almost as much or more than your tuition in box 1, most CPAs and tax programs will NOT calculate the credit correctly.
Does a parent filing married filing separately affect the education credits. We filed jointly in 2021 & daughters info qualified for American tax credit but didn’t qualify 2022 when filing separately.
Yes. If you're filing status is married filing separately, you cannot claim any of the education credits.
As a side note, I can think of extremely few examples when two people would want to file separately. Maybe you should reach out to me to discuss why you're filing separately, and we can see if there's a better way to achieve your goals.
Email me. Steve Hunt CPA at College Tax Refunds dot com.
What if I actually paid $2500 out of pocket above any scholarships my son (he is a dependant) received. I would be eligible foe yhe AOC, correct?
Correct. If you paid $2500 more for qualified tuition and related expenses over and above your son's scholarships, you can simply report the $2500 and claim the American opportunity tax credit. You will be able to claim up to $2125 in credit.
However, you can claim up to $325 more in credit if you can report $4000 of qualified expenses paid over and above your son's tax-free scholarships. To do that (assuming you paid exactly $2500 more than your son's scholarships), your son would need to report $1500 of his scholarships as taxable on HIS tax return. Then you can report the entire $4000 of qualified expenses on YOUR tax return.
Hello! I have a question. I filed last year and my 1098 form had Spring 2022 semester billed on it for 2021. Now fast forward I’m trying to do my taxes and my 1098 form has $0 for qualified tuition I’m assuming because it was on the 2021 form. I did receive scholarships for the year 2022 and those do show up on box 5 of the 1098. I’m sort of lost and don’t know what to do from here. Please help me!
Thanks for the question. If all your 2022 tuition and qualified expenses was billed to your student financial account in 2021, then that is the year you must claim the education credits (2021). You cannot claim an education credit in 2022 unless you paid qualified expenses (tuition, etc) in 2022, which it sounds like you did not. You don't need to do anything this year (2022), but you can potentially go back to 2019-2021 and amend those tax returns to claim the valuable education credits, if you want, and if you didn't already claim them. Reach out to me at (Steve Hunt CPA at College Tax Refunds .com) if you want my help in your specific situation. Remove the spaces and change the "at" to an @
Can you discuss box 4?
Box 4 is an extremely complicated box, haha! You may want to email me directly at Steve Hunt CPA at College Tax Refunds dot com to discuss your specific situation.
The correct and complete answer to this question depends on the following information:
• The number in box 1 on the current year 1098-T
• The number in box 5
• All other numbers and boxes checked on the prior year 1098-T
• Your filing status and adjusted gross income for the current year
• Your education credits and American Opportunity tax credit claimed on your tax return in the prior year
Helpful information can be found under the heading "credit recapture" in Publication 970. However, without completely understanding everything about these complicated education credits, it's very possible to misread and misunderstand this section.
I've never filled my 1098-T, should I still file if I was a full-ride student (I had a sponsored paying for my school).
For most people, the answer to your question is Yes. If the source of your sponsorship was a scholarship or grant, you can typically include part of it in your taxable income and then either you or your parents can claim a valuable tax credit worth $800-2500. If your sponsor was giving you a tax free gift, you should definitely claim the education credit, and you don't even need to include the gift in your income. I would love to hear more specifics about your situation and answer your unique questions. Please reach out to me at CollegeTaxRefunds.com/contact
I have one child in college 3 years now and she never got a 1098-T until this year. I assume it's because she was covered under the Hazlewood Act for all 3 years. This year (3rd year) she got a 1098-T because she received 2 scholarships in addition to the Hazlewood Act. It paid for her tuition but the scholarships paid for her new computer and books since she took half her classes online. I have another child who started college this year and we took out a Sallie Mae loan. I went to enter everything in TurboTax and my child who just started college with a Sallie Mae loan received the American Opportunity Tax Credit and the Lifetime Learning Credit. My child who has been in college for 3 year is not able to get it or I'm entering something wrong. My question is can both children qualify for both these credits in the same tax year or is it for 1 child only? If both can get it, then I'm not adding the scholarship monies correctly to be taxed as you mentioned in your video. I've looked in TurboTax and I'm not seeing where to add the scholarship money for it to be taxed. I don't know if TurboTax is able to determine this but it does calculate correctly how much scholarship money my 1 child received. I'm not even sure if both can receive the American Opportunity Tax Credit and the Lifetime Learning Credit. I didn't hear anything in you video regarding having more than 1 child in college. Any ideas because I can't seem to locate an information on it?
I figure out how to do it in TurboTax. Now, I understand why you want your child to list it under other income 1099-Misc on their tax return. I see how you get a bigger refund doing it this way. I would have missed out on nearly 1400 dollars for the one who used the Hazlewood Act and received scholarships. Huge difference when the scholarship money is listed as taxable income. Getting over 8k back. Thank you for the tips.
Thanks for watching and for commenting. I'm so sorry I didn't respond earlier. I was never notified about your comments. You CAN claim the AOTC for two students, if both qualify. You should NOT include their excess scholarship as "Miscellaneous income," but you should include it on the student's tax return as "taxable scholarships." If you've done it correctly, it will show up on the WAGES line, NOT on the business income line. TurboTax is not very helpful at all when it comes to doing this correctly. Most people who use TurboTax miss out on this credit. I'm glad you figured something out, and I hope you didn't end up missing too much. If your elder daughter has been in college three years before this year, you should be able to go back and amend the previous three tax returns for her and for you and collect an additional $800-2500 each year, if you do it right. If you want to discuss it more or you need my help, please email me at (steve hunt cpa at college tax refunds.com) -- remove all spaces and use an @ instead of at.
I need to file 1098-t’s for my daughter and I. 1) I paid for my daughter’s tuition and books up front. How/where do I claim what I paid for her? 2) How/where can I claim the cost of my computer, since my classes are online? It would exceed the amount on my 1098-t. Not sure if it’s allowed.
I appreciate any advice you can give me. Thank you 🙏
Another question! 3) If my daughter’s 1098-t goes on my taxes, because she’s my dependent, how/where does she put the 1098-t information on her taxes, when she files?
I want to make sure that we don’t unintentionally double claim the information on her 1098-t.😬
@@NothingBtBlueskies Thanks for your questions and for watching.
If you are both undergraduate students working on your first 4-year degree, and if you haven't claimed the American opportunity credit (AOTC = up to $2500 credit) 4 times, you claim all qualified tuition and related expenses (QTRE = box 1 tuition, other fees and required books and materials you paid for) on your form 8863. There will be a page 2 of the 8863 for you and a page 2 for your daughter. Both of those should be claimed on YOUR tax return, NOT your daughter's. The maximum amount of QTRE you can claim is $4000, and you definitely want to claim at least $2000, if you're eligible for the AOTC. However, your QTRE must be reduced by any tax-free scholarships or grants (SCH = box 5).
If you don't have $2000-4000 of QTRE left after subtracting your scholarships and grants, go ahead and include some of YOUR SCH in YOUR income (on the Wages line) and include some of your daughter's SCH on HER income on her tax return. That makes the scholarships TAXABLE, so they don't reduce your QTRE. Watch other videos on this channel if you have more questions about this or reach out to me at CollegeTaxRefunds.com/contact. This is a very complicated area of tax law, but it's worth thousands of dollars to you to get it right.
HI, what if box 5 is higher than box 1? My daughter is my dependent. Her scholarship is $15000 and the tuition is $10000, there is a $5000 scholarship income. How do I enter the 5000 income in turbo tax? Thanks
Thanks for the question. Assuming your income qualifies for the American opportunity tax credit of up to $2500, and assuming you don't have any Earned Income Credit, you should probably include $9000 of scholarship income on the wages line of your daughter's tax return. This will allow YOU to claim the full $4000 of qualified tuition and related expenses for the American opportunity tax credit. However, if your income is too high to claim the American opportunity tax credit, or if you have the Earned Income Credit, then it works differently, and you should contact me at CollegeTaxRefunds.com/contact
Who includes the scholarship income? The parents or the dependent student?
Always the student.
should I have my parents un-register me as their dependent so I can get the tax credit?
Thanks for the question. There is no way for your parents to "unregister" you as their dependent. If they provide for more than half of your total financial support, and if you are young enough, then you are their dependent. If their income is below $180,000, they should be able to claim the credit on their taxes. If their income is higher than that, and if they do not provide at least half of your financial support, you might be able to claim the credit. Email me your additional questions at CollegeTaxRefunds.com/contact
Hello kind sir, I hope you are well. Quick question: I am dependent on my parents and they file a joint tax return. I was employed for about a week year of 2022 and earned my wages. I have been attending college for two years (2021-2023) with a full ride due to grants. Since the grants exceeded the amount of tuition I had to pay, I got the excess left for myself throughout these two years via direct deposit. Do I need to file tax return? Also, I got a 1098 T form, do I have use for it?
It sounds like you do not HAVE to file a tax return or use your 1098-T. However, if you do not use your 1098-T the way I describe in my videos, it's extremely likely that your parents will have missed a $1000-2500 tax credit (cash refund) every year that you're in college as a dependant.
If you or your parents have additional questions, email me at (Steve Hunt CPA at College Tax Refunds. Com) remove all the spaces. I'll answer your specific questions
@College Tax Refunds I'm sorry for the hesitancy, but for safety reasons I hope you understand and don't take this personally: With all due respect, can I trust you for the help you offer?
@@_blackturtle_5734 I understand your hesitancy completely. You can email me from whatever account you want; I'm just going to answer your personal questions about your specific tax situation.
You can look be up at cpaverify.org. my name is Stephen Paul Hunt, my Idaho CPA license is CP-5841.
You can Google my College Tax Refunds LLC business at the BBB. We are not accredited (which just means we don't pay them the $600 per month they want), but we have an A+ rating
And you can watch all my videos to see if I know what I'm talking about.
I'm not sure what else to say. 🤷♂️ If you think of a way I can get you to trust me, let me know. I tried for 8 years to get people to trust my College Tax Refunds business. When they trusted me, I got them $1300/year back on their taxes on average. But lots of people also didn't trust it. And I get that.
Unfortunately, I never figured it out until after my website went down during the pandemic. That was right about when I started making these RUclips videos.
And that's when people finally started to trust me... But now I don't have a website to direct them to. I'm trying to get it rebuilt, but it takes time and money.
You do what you feel comfortable doing.
Hi Steve,
Is your website down? It automatically redirects me to your RUclips channel. What’s another way to contact you?
Yes. Please contact me at this email:
Steve Hunt CPA at College Tax Refunds. com
Remove all spaces and replace "at" with @
I just have a numerical value under box 4. What does this mean/ how will this affect me ? I am a recent college graduate.
Thanks for your question. If the only number is in box 4, you probably don't have to do anything this year. If you previously claimed an education credit, the IRS might expect you to recalculate or amend that, but I've never heard of them actually demanding that. But if you're a recent graduate, there's a great chance that you received these 1098-T forms for the last 3 tax years (2019-2021) and you didn't use them to claim the $800-2500 you could have claimed every year. If you didn't claim the maximum American opportunity tax credit on your taxes for the past 3 years, let me know!
I didn’t use my last yeas 1098 and I just got my new one can I use both this year? P.s i didn’t know what is was so I’m researching
Thanks for watching! In order to use last year's 1098-T to claim the American opportunity tax credit (usually worth $800-2500), you will need to amend (fix) last year's tax return for yourself and your parents (of you were a dependent). If you would like more specific assistance, please email me at (Steve Hunt CPA at College Tax Refunds. Com) - remove all spaces and change at to @
Hello! Does this apply to FAFSA pell Grants?
I'm not sure I understand your question. FAFSA Pell grants can be included in your taxable income, thus enabling you to qualify for the American opportunity tax credit.
Hi. I am needing help with my AO credit. I had the college help me with it and it looks to me as if they did that part incorrectly. I need help please.
I'm hoping RUclips sends you an email of this comment when I post it, because I'm going to share my email address with you, but I don't want it to remain in the comments of this video. So, I'm going to edit out the email address after I post it. Here it is:
[Redacted]
Contact me at that address, and I'll see if I can help.
If you didn't receive the email address above in an email from RUclips, post a reply to this, and I'll figure out another way to contact you.
I am an international graduate student and recently got an OPT job. I have received this Form 1098-T from my university, so am I supposed to give this form to my new Company's HR? and where to write the expenses for books or computers in this Form?
Thanks for watching and for your question!
Graduate students, foreign students, and OPT jobs are not my area of expertise. I focus on US undergraduate students with too much scholarship and no job.
However, I can't think of a reason you need to give the 1098-T to your Company or to write on it your books and computers.
This form is for your information, so that you can legitimately claim an education credit or deduction on your US taxes this year.
If you file a US tax return for 2021, please give the 1098-T to the person preparing your tax return.
Can my 19 yr old full time college student claim the AOTC on his own tax return? He had a part time job with income over $7000. Our income is over the limit to claim the credit. She we just not claim him as a dependent and loose the 500 so he can claim the AOTC.
If your student had enough earned income to provide for MORE than half of his total financial support (including ALL his costs of living) and you did NOT provide him with more than half of his total financial support, then he is not your dependent. If you DID provide more than half of his total financial support (for example, he lived at home and ate your food and was on your health and car insurance, etc.), then he is your dependent and cannot claim himself or the credit.
What if you were sent this form but you have withdrew from school? are you still eligible for this tax return? Are you only eligible for the tax return if you're enrolled with school whether its part time or full?
In order to claim the American opportunity tax credit (which you can do a maximum of 4 times), you must have incurred tuition while working at least half time (2-courses at a time) for at least one full semester towards your first 4-year credential or degree. If you did not actually go to school or take classes, you cannot get the credit. If you were required to pay tuition, you should look into the availability of getting it refunded.
Im in high school and I got one of these paper and I’m a bit confused . Is this like a bad thing or a good thing?. Also when I get one do I have to do anything?
If you're in high school and you attended some college courses, you don't have to do anything with the 1098T. But you might want to give it to whoever prepares your parents' taxes. It's possible they can deduct your tuition or claim the lifetime learning credit under certain circumstances.
Great video for educating parents like me having college kids. I had a scenario where my kid has to wait for almost 8 months to get her in-state eligibility approved so I had to continue to pay out-of-state and the college prorated excess payment and refunded me in the next year. Obviously I received 1098-T with box 4 amount filled in for 2023. I would assume this has to be recaptured in the previous year (ie 2022 tax filing) and compute if I still owe any in the year 2022. I was also told the otherway (ie 2023's 1098-T qualified expenses has to be arrived by subtracting box4 from box1) and this does not seem logical to me. Anyone is/was in similar situation and how did you go about it?
Box 4 is an extremely complicated box, haha! You have already contacted me directly at Steve Hunt CPA at College Tax Refunds dot com to discuss your specific situation, and I have emailed you back.
The correct and complete answer to this question depends on the following information:
• The number in box 1 on the current year 1098-T
• The number in box 5
• All other numbers and boxes checked on the prior year 1098-T
• Your filing status and adjusted gross income for the current year
• Your education credits and American Opportunity tax credit claimed on your tax return in the prior year
Helpful information can be found under the heading "credit recapture" in Publication 970. However, without completely understanding everything about these complicated education credits, it's very possible to misread and misunderstand this section.
But what if my qualified expenses is more than and the scholarship? That would mean my scholarship is tax free right? Can I still claim the AOTC? Example if my expenses are 7k and my scholarship is 4k, I can only put the difference of the two up to $4,000? I hope I’m understanding you correctly. Thanks for making this video!
I'm just starting to wrap my brain around this, but so far, my understanding is that in order to potentially maximize your AOTC, you would need to pay taxes on the difference *plus* an extra 1000, so the full $4000 of QTRE is left to claim the full $2500 of AOTC. Run the numbers both ways and see how much of a difference it makes for you. That extra $1000 of taxable income may influence other credit eligibility that can sway the numbers.
This response is correct. Thank you both for watching and commenting!
After watching this video I have done research on this over the past few days and I want to make sure that I am understanding this right. I have read parts of the 970 publication and I’m using a free online tax software. I am in the 12% tax bracket and received $4415 in scholarships with about $3000 qualified expenses. I have entered the entire scholarship as other income, doing this does not put me in the 22% tax bracket. Claiming the full scholarship as income gives me the most back on my refund. Is this the right way to do it?
Thanks for watching. I can't answer specific questions about specific individuals without asking lots of questions. Everyone's situation is different. Is there someone who is allowed to claim you as a dependent? Did you provide for more than half of your own total support, including food, rent, transportation, etc.? Is $3,000 the total of your tuition AND books and fees? Does the tax return show that you are getting $1000 for your American opportunity tax credit?
@@collegetaxrefunds No one can claim me as a dependent. $2624 is my tuition and fees stated on my 1098-T and $300 is required books not purchased from the school. Education Credit is $1,339 and Refundable American Opportunity Credit is $892
@@MustLoveDisney this looks correct based on what you've provided
@@collegetaxrefunds ok great. Thank you for your help.
@@MustLoveDisney you're very welcome
In my form 1099-T it says I have no tuition expenses (box 1) but in the scholarship box, it’s says $2,000 that I received. I realistic spent on $150 on school expenses. The remaining $1,850 was for non school related stuff. What form/line do I included the $1,850 that wasn’t used for school? With paying taxes on that amount and so little school expenses, I do still qualify for the American opportunity tax credit? I’m filling single, used the credit only once before, not a felony,etc.
Sorry for the slow response. It's better to email me at Steve Hunt CPA at College Tax Refunds. Com. I think we should discuss your situation specifically. This is a difficult situation. In short, if you include all $2000 in your income, you should be able to claim a small amount of the AOTC, but it might be better to amend other tax returns and claim it in a previous year or in a future year
Steve, Regarding the child tax credit for Freshman, Sophomore and Junior year, my daughter was a dependent . The tax preparer told her "It's too bad your parent's didn't give you that $15,000.00. It would have helped you get by. Our daughter has held this over my head and has now and no longer speaks to us. She says I owe her the $15,000.00. I have the 2011 Form 1098-T. It shows in box 2: $28,700.00 and box 5:$25,452.00. The tax preparer has passed away and I really could use some advice. It's totally wrecked our family. She graduated in 2012 with three degrees. PARENTING---ugh. Thanks for any help you can provide.
I'm sorry I didn't see this until today. I'm sorry you're having parenting and tax challenges. I want to help! At this point, I do not understand the situation that you are describing. Your college student would not qualify for a Child Tax Credit her Freshman, Sophomore, and Junior year. Are you talking about High School? Or are you talking about the American Opportunity Tax Credit? If you are talking about the AOTC, there is no way you could have received $15,000 from that credit over three years. The maximum would have been $7,500, and even that seems unlikely based on the numbers you've given me. So, I'm not entirely certain what your tax preparer was talking about. Based on what you've shared with me, I cannot understand why you would owe your daughter $15,000. And if she was your dependent AND you paid all of her tuition yourself, then there is no reason at all in my mind that you would owe her any money. Without any further information at all, I would just tell you that many college parents are able to get a $1000 credit on their taxes that their college student children could have also possibly claimed if their parents hadn't claimed them as a dependent. Many parents pass that $1000 credit on to their children IF their children are paying their own tuition. So, again, based only on the fact that I can't understand what your tax preparer is talking about, I would simply say that the most I could see you paying your daughter is $3000 for those three years, and that is ONLY if you claimed the American Opportunity tax credit on your taxes those three years and ONLY if she paid her own tuition those three years -- and you are NEVER obligated to share that money with her; that's just something many parents choose to do in those circumstances. Let me know if you have questions.
@@collegetaxrefunds Hi Steve, The tax preparer filled out the FAFSA forms for us. This was for college by the way. So, my understanding is that for the student to qualify for the tax credit they must be: A. Married B. In the military C. Orphaned or D. emancipated from parents. None of those applied. She had to be declared a dependent until she was 21. She went to a university for four years. She had a part time job while being a full time student ,which is where the problem in her mind comes in apparently. She began college at 18. The advice our tax preparer gave us is what we went with and THEN she told our daughter what I have posted to you. I hope you can offer insight into this. Thanks for responding.
@@mogala3068 Thanks for responding.
At this point, you have mentioned the Child Tax Credit, the FAFSA forms, your daughter's 1098-T numbers, a nebulous $15,000 amount mentioned by your tax preparer, and an unidentified tax credit with requirements I'm not familiar with, but they are similar to the requirements for claiming a Pell grant without reporting the income of your parents.
In other words, I am very confused as to what tax credit or grant we are talking about. We'll never know if your tax preparer knew what she was talking about (most tax preparers do NOT understand the complexity surrounding student tax issues), but it seems very clear to me that she did not do a good job explaining to you or to your daughter what it was she was talking about. I can't make heads or tails of it.
I don't know where you would have gotten $15,000 to give to your daughter. If your tax preparer thought there was a way for you to claim $15,000 and give it to your daughter, she certainly should have helped you claim that money, and she should have instructed you to give it to your daughter. Since I'm at a complete loss concerning whatever she was talking about, all I can say is that it sounds like this entire family fued is the fault of your tax preparer; not you or your daughter.
@@collegetaxrefunds Thank you. I agree and sadly nothing has changed other than the fact that the tax preparer is deceased. When I did change tax preparers (before the other one passed) the first thing he noticed was that she had us paying WAY WAY too much in state income taxes for years. We ended up getting back close to $9,000.00 when the state reviewed it. There is very little I can do to assure my daughter no one took anything from her nor would we ever. We sent all our kids to Catholic schools and everything was fine until the late tax preparer threw that bomb into a ripe for the pickings brain of our girl. It's a shame. But, I know I have always followed the law and did what was expected of my finances. I also realize that we're not the only parents who are going through rifts with their 'adult' children over various other things. College can mess a kid up these days.
Thank you for your time in answering my questions.
@@mogala3068 I'm sorry for what you're going through, and all I can say (I hope it helps) is that I will pray for you and your daughter to reconcile, as I cannot comprehend what your tax preparer was talking about. I am likely the only CPA in the country focused (for almost a decade) entirely on the tax questions and issues of college students. That makes me the expert on the subject, and I don't think your tax preparer knew what she was talking about, and if she did, she certainly didn't explain it very well to you or your daughter.
If your daughter would like to try to explain it to me, perhaps I can figure out what we're talking about. Or if there's anything else I can do for you, please let me know.
please help. my 1098 T form looks like I have excess scholarship money because it does not include room and board/meals in qualified expenses. it looks like I have 2k extra but I actually pay 9k out of pocket. if I report the 2k as taxable income, can i still receive the aoc and llc?
Thank you for your question. Room and board are not qualified expenses. You have two choices. You can simply ignore the excess scholarship reported to you, and then you do not have to pay tax on it, because you used it on your non-qualified education expenses, such as room and board. That is an acceptable method that most students use. They just don't report their scholarships as taxable income. However, I think that method usually hurts most students. It is probably best if you report that $2,000 as taxable income on the wages line of your tax return. In fact, you should add an additional $2,000 to 4,000 as taxable income in addition to that excess 2000. In other words, if I were you, I would include $6,000 of extra scholarship income in your taxable income. This is the only way that you will be allowed to claim the American opportunity credit for up to $2,500. That credit will cover completely any additional tax that you might owe to the IRS because of including that extra $6,000 in your income. It is much better to pay tax on that $6,000 and claim the American opportunity credit then to skip both of those things. you should end up about $1,300 ahead on average if you do it this way. If you have any questions, please reach out to me. This is very complicated. If you do it incorrectly, the IRS will complain. You can contact me at Collegetaxrefunds.com/contact
Ok in order to claim this American Opportunity credit, I need to file on paper only? I’ve been using Turbo Tax and haven’t receiving the credit. So this year I want to do right and do amendments as well for previous years.
You can claim the American Opportunity tax credit when you file electronically. However, it's very difficult to claim correctly if you have scholarships or grants. TurboTax doesn't know how to do it correctly. I'm happy to help you claim the credit this year and previous years. Please email me at SteveHuntCPA at CollegeTaxRefunds dot com
@@collegetaxrefunds it says the email is not valid
@@collegetaxrefunds i got it
So my question is: I am enrolled in a graduate program, and my 1098 T is $6586. My wife was in an undergrad program, and her 1098T shows $3500. Do I file the lifetime credit and her the American credit? Can both be claimed?
Thanks for watching and for your question. You can claim the AOTC for your wife and the LLC for yourself, as long as neither of you can be claimed as a dependent by someone else, and as long as you both otherwise qualify for the credits. You might also be interested to know that YOU can claim the much more valuable AOTC for YOURSELF this year IF you and your parents have NOT claimed it 4 times for you in the past AND if you had not graduated BEFORE the beginning of 2022. In other words, if you graduated in April-December 2022, you can still qualify for the undergraduate tax credit this one final time.
Hi, Student has to file Federal and State tax returns for scholarship money?
Students rarely HAVE to file a tax return to report their scholarships. But in many cases, if it's done right, students should file them anyway to claim even more money. But most CPAs, IRS agents, and even many of the instructions you'll read online don't know about this, even though it's found in IRS publication 970 and in the fine print of the 1098T itself.
If your tuition is more than your scholarships, you should use the extra tuition to claim an education credit, if possible.
If your scholarships are more than tuition, the excess is technically taxable by law. However, most CPAs and the IRS tend to just ignore this law.
But ignoring that law and failing to report your scholarships as taxable is often detrimental.
If you're an undergraduate college student who hasn't claimed the American opportunity tax credit four times, and if you cannot be claimed as a dependent, or if your parents have income below $160k, then you almost always will benefit by reporting all your excess scholarships as taxable income on your student tax return.
In addition, you (the student) should ALSO report another $2000-4000 of scholarships as taxable. It is THIS action of claiming even more scholarships as taxable on the student tax return that then allows you (or your parents, if you're a dependent) to claim $2000-2500 of the American opportunity tax credit. And $800-1000 of that credit is considered "refundable," which means you get the money back from the IRS even if you didn't pay any money to the IRS.
And that's why it makes sense in many cases for a student to report their entire excess scholarships PLUS $2000-4000 as taxable income, because then they or their parents can claim an extra $800-2500 refund.
But you don't HAVE to claim that money, if you don't want to. But I don't know why you wouldn't.
This is an extremely confusing area of tax law. As I said, many IRS agents don't understand it. It can be difficult to do it right. I try to explain it in my videos.
If my students scholarships cover all qualified expenses and Room & Board, then can we still claim $4000 AOTC by having the student claim $4000 in income, even though we have no out-of-pocket. Thanks for the great videos.
Unfortunately, it is more complicated than that. The student needs to claim AT LEAST the excess scholarships in income (the amount that 1098-T box 5 exceeds box 1 + REQUIRED books and supplies) and then they ALSO need to include in income an equivalent amount of scholarship as the expenses you intend to claim as Qualified Tuition and Related Expenses for purposes of the AOTC. It requires a specific formula (or guess and check) to determine the exact amount of scholarship to include in income to claim the correct amount of AOTC to maximize the total tax benefit. The more scholarship you include in income, the more AOTC you can claim (up to $4000 of QTRE), but this might also increase the student's federal and state tax liability. In summary, the amount of scholarship to include in the student's income in the case you've described is usually going to be the excess scholarship PLUS the amount of QTRE you are claiming, but you don't want to claim too much or too little. If you have more questions about this extremely complicated calculation, please contact me directly at this email address:
Steve Hunt CPA at College Tax Refunds. com (remove all spaces and change the at to @)
What is box 1 and 2 are empty, box 5 has 8000. Even though I didn’t get 8000 all to me?
That's a great question. You may need to ask your student finance office or bursar why your 1098T shows scholarships only and no tuition. It could be that you paid the tuition in a different year than you received the scholarships, or it could be that they prepared it wrong. Let me know what they say. And if you have more questions, email me at CollegeTaxRefunds.com/contact
What if your parent’s income is too high and disqualifies you from these credits? Should they not claim you as a dependent then?
Thanks for watching and thanks for the question! You should definitely examine carefully whether your parents can or should claim you as a dependent. I need to make a separate video about this. If your parents pay for more than half of your support during the year (this includes all of your living and school expenses, etc.), and if you are young enough to be their dependent, then you cannot claim yourself. However, if you work with your parents to make it so that you are providing your own support (whether through a job or through loans and financial aid), then you can arguably claim yourself and qualify for the credits. You should talk to a CPA about how to do this right.
@@collegetaxrefunds Yes please, have you made a video on whether a parent can or should claim the student as a dependent?
I have not yet. I will bump this up on my to-do list.
Hi, I got grants and FAFSA and I have three of the 1098-T (2020,2021,2022) and they all say “Copy B For Student: This is important tax information and is being furnished to the IRS. This form must be used to complete Form 8863 to claim education credits. Give it to the tax preparer or use it to prepare the tax return”. I am a dependent and my family has a tax preparer who does our taxes, but I did not know I was supposed to inform our tax preparer about these; I thought that he would have already received the information through the IRS. I will send him the 2022 form when we do our taxes in a few months but what do I do about the 2020 and 2021 forms? My school has sent me online versions of them.
Will I get in trouble for not have shown those forms in 2020 and 2021? Should I mention to the tax preparer that I didn’t send the 2020 and 2021 forms?
You will not get in trouble. In almost every case, the 1098-T can help your parents to get $800-2500 more back on their taxes, if their CPA knows to report your grants on your own taxes and claim the AOTC credit on your parents taxes. Forgetting to claim the credit means your family missed out on hundreds or thousands of dollars. They can amend their old taxes to claim that money, but no one will get in trouble. If your parents need help amending the old taxes to get the money, or if you just want me to check to see if there's money available, reach out to me at (Steve Hunt CPA at College Tax Refunds. Com).
@@collegetaxrefunds Thank you. Would it be okay to give the 2020 and 2021 forms at the same time as I will be giving the 2022 and let the tax preparer check if there’s money available? Will there be a chance of not getting money back due to me not turning in the 2020 and 2021 forms in on time? Also, is it $800-2500 per year or is it accumulative of all years? (fyi: I am unemployed and my parents file their taxes jointly with me as a dependent)
@@kindree5414 you can provide the 2020-2022 1098-T tax forms to your parents' tax preparer at the same time. Your parents can in most cases receive $800-2500 back per tax year. Many parent choose to share this money with their college student unless the parents are the one paying for all of the child's education. However, if you have received substantial scholarships or Pell grants (especially if your scholarships in box 5 is more than your tuition in boxes 1-2 of the 1098-T), it's extremely likely that your tax preparer won't know what to do with these forms and will tell you that nothing can be done with these forms and that you don't qualify for the $800-2500 American opportunity tax credit. In most cases, this is incorrect. Unless you yourself are receiving the Earned Income Credit, or unless your scholarships and grants exceed your tuition by more than about $20k, or unless your parents work for the university, there's an extremely high chance that your parents should qualify for this $800-2500 credit, but your tax preparer might tell you that it's not possible or not worth it to claim it. This is a mistake. If that's what they say to you, and they will not help you get the credit for the past two years, please reach out to me again. I will take a look at your parents taxes for free and tell them EXACTLY how much money they can get back and how much it will cost them.
ok my so did not work last year . meets the half student , 1098-t line 5 600.00 line 3318,50 how i handle this first year of school
Thanks for watching and commenting. You should report all of your son's scholarship income as taxable on his taxes, unless his income for the year was too low to file a tax return (it sounds like it was). Then, you should claim your son as a dependent on your taxes, and you should report all of his tuition and books as qualified expenses for the American opportunity tax credit on your taxes.
Hi, this is the first year I received FASFA and am doing my taxes with turbo tax. It’s not giving me a form to fill out for that it’s just asking what the total grant money I got was and immediately deducted it from my tax refund. What am I doing wrong?
Unfortunately, what you're doing wrong is using TurboTax. That program is only as good at doing taxes as the person who is using it, and if the person using it doesn't have a solid understanding of the very complicated tax laws surrounding the American Opportunity tax credit, then they are likely to miss $1000-2500 (average $1300) on their tax refund. Unfortunately, too many people are scared to pay $300 to hire a CPA, so they use TurboTax and miss $1300 instead. 😢 Big mistake; they just lost $1000 with that choice.
But not all CPAs understand this complicated tax law, either.
If your tuition in box 1 is at least $4000 more than your scholarships and grants in box 5 on your 1098-T, then TurboTax and most CPAs will do your taxes right. But if your tuition is less than $4000 more than your scholarships, it's very complicated. You need to include some of your scholarships in your taxable income in order to claim the largest education credit. However, the amount you claim in your income and the amount of the credit you can claim depends on many factors, like whether you can be claimed as someone else's dependent, the amount of their gross income, whether you are claiming the earned income credit, etc.
I'm sorry it's so complicated, but it just is. If you would like more specific help with your situation, please email me directly at SteveHuntCPA at CollegeTaxRefunds dot com. Turn that into a normal email address
Unfortunately, the answer to this question is extremely complicated. It depends on 1) if you can be claimed as a dependent by someone else, 2) your income, 3) your tuition amount, 4) your scholarships, 5) your earned income credit, and several other factors. If you would like specific help, please email me at SteveHuntCPA at CollegeTaxRefunds dot com.
Do you have a video going through filing out a student's taxes. My parents don't know anything about taxes. I'm only 17. I have to help myself. You did a great job explaining it but I just need confirmation.
Hi! Thanks for the question.
I have several videos that discuss the 1098-T form and how to correctly claim the American opportunity tax credit on your taxes, but I don't have a video "going through filling out a student's taxes." Every student's taxes will be different, and the way you claim the credit will depend on whether you're a dependent or not, whether you're married or not, whether your parents have a high income or low, whether you received the earned income credit, and how your scholarships and grants compare to your tuition. Unfortunately, I would need to make at least 10 videos preparing student taxes to even begin to show how to correctly claim this credit, and then the people watching would have a hard time knowing which video applied to their situation. If you have a specific question and answer you need confirmed, let me know what that is, and I'll do my best to help.
@@collegetaxrefunds Hi, if someone is single, zero dependents, not a dependent Box 1 $9090 and box 5 $28974 how much should I claim as other income? Or can it be any amount as long as you reduce it in the grant amount? Also, is this still necessary if the student worked.
@@ShawSolve In order to accurately answer your question, I will need more information. You may want to email me at Steve Hunt CPA at College Tax Refunds dot com. In order to find the very best answer, I need to know how much your AGI and earned income is, how much your tax and other credits are (including the earned income credit), what your birthdate is, and how much your books and other required education materials and expenses were, whether you have already finished 4 years of college, whether you have already claimed the American Opportunity tax credit 4 times, whether you were at least a half time student during the year, and other things. Without that information, it's likely you'll include too much scholarship in your income (and pay too much in tax) or too little scholarship in income (and not claim the full education credits).
My son in college I claimed him as my dependent for the past 3 years and I did not include the college tuition
This year my son did his tax he got that form from college with 1200 dollars
My question is can I ask for this grants for the past 3 years I did not know about ?
If your son received a 1098-T with tuition on it during the past 3 years, you can amend your old tax returns to claim the tax credit you missed, which might be up to $2500 per year, if you and he both meet the qualifications. If he received scholarships or grants during that time, you might have to include those in his income on his tax return - but probably not if he didn't file a tax return or have any other income.
What if my daughters part time college. Do I qualify for the credit? I'm a single mom claiming head of house hold.
If she's more than a half-time student, it's possible to qualify. There's a box on the 1098-T that says "more than halftime student." That needs to be checked by the university.
Hi. I filed 2020 tax without reporting form 1098T. Now I need to amend it
I received 1098T that amount in box 5 is greater than in box 1. Do I report taxable income the excess amount?
I also received an emergency aid from school due to the pandemic, this amount is included with the amount in box 5, does it mean I have to report the whole amount on box 5. I see from the IRS website that emergency aid granted to students due to Covid is not taxable.
I’m little confused on this part. Please help
Thank you for reaching out. It would be a mistake to simply report the amount in box 5 on your taxes. Instead, if you are eligible, you should report SOME of the box 5 amount and then either you or your parents should claim the $800-2500 American Opportunity tax credit.
Are you a dependent of your parents? How old are you? How many years have you attended college?
If you would like, please contact me directly at CollegeTaxRefunds.com/contact
@@collegetaxrefunds Is there a number I can reach you on please
@@Htman all of my contact information is at the contact link I gave you.
Thank you for your explanation on the 1098-T. On my form i received from my college i only have amts in box 5. I used very little for school expenses. Am I eligible for any of the credits you mentioned? Also do I still need to report the amt in box 5 as income. This is my first year receiving this form. I’ve read some place that I do not need to include this on my 1040 if I’m not claiming any credits. Please advise. Thank you.
Hi I have a question so for my 1098-t I only have box 5 filled out with numbers everything else is blank box 8 is checked off what do I do? Do I use my 1098-t on my taxes or no or do I just enter what’s in box 5 ? Will I have to pay or will I get credit back
What is the number in box 5, and why did you not pay any tuition?
I have the same issue. Box 1 is empty because parents sent the payment I’m Dec of 2020, for spring 2021
@@Sososewist if that's the case, the credit should have been claimed by your parents (if you were a dependent) in 2020. I would have to know a lot more about your tax situation to tell you whether you need to include the scholarships in your income in 2021. From a legal standpoint, it's likely. But from an enforcement standpoint, I'm not sure the IRS will care.
@@collegetaxrefunds thank you so much. I think they make too much for the deduction.
@@Sososewist the phase out begins at $160k
Interesting
Thanks for watching and commenting.
Hi I have a question I gave a monthly payment to my lender and only received a 1098-E. Is that the same thing? Where can I asses the 1098-T.
Thanks for watching and thanks for the question. Were you still a student in 2022, or had you graduated? The 1098-T is for students at colleges and universities. If you were a student, you can Google the name of your university and 1098-T, and that might point you to the right place. Or call your student Finance office.
I have 1098-t from 2019 to 2021. What form to amend do I need for tax year in 2023? I have not file any of the three years with the 1098-T.
This is a complicated question that depends on your tax situation. If you want to reach out to me at (steve hunt cpa @ College Tax Refunds.com) - all one long word - then I can ask you specific questions about your taxes and answer your questions.
Hi, I’m a full time student and I’m my parents dependent. My Pell Grant covers my whole tuition expenses and my parents don’t pay anything for my education. How can they claim me as a dependent college student? When I checked on my college website, it says that you’re only eligible for a 1098-T form if you pay out of pocket, so we never got one. Could my parents get a tax return on me if they didn’t pay anything for my education? If yes, how? Please let me know, thank you in advance.
Yes, your parents can claim the American Opportunity tax credit (usually $800-$2500 on their taxes) if you are their dependent. In order to do this, you must request the 1098-T from your university. They should send one if you ask. Then, you must include all of your EXCESS scholarships and grants in YOUR own taxable income on YOUR own tax return, if you are required to file one. You also must include $2000-4000 more than the excess in your taxable income (in the case you've described, it's likely best to include the full $4000). Then, because you reported your excess scholarships + $4000 of scholarships in your taxable income, the IRS "deems" (pretends) that your taxable scholarships were spent on non-qualified expenses, such as housing, food, transportation, insurance, etc. The IRS also "deems" that the assistance provided to you by your parents (if they are providing no assistance, then they cannot legally claim you as their dependent) was actually used to pay for your education. This is why they can then legally claim the American opportunity tax credit. The only way this doesn't work is if your parents make more than the allowable income for the credit.
@@collegetaxrefunds We asked the school for the 1098-t form, they said I wasn’t eligible to receive it because I didn’t pay out of pocket. My financial aid was greater than my tuition, I even got a refund. How can my parents get a tax credit on me when my school won’t provide the form?
@@MichaelSmith-ig6jc I'm sorry I didn't see this note until now. I hope I can still help you. You can email me directly about this at (steve hunt cpa at college tax refunds.com) remove all spaces and change the at to an @. You need to talk to the school bursar or financial office directly and tell them that your CPA says that they CAN still issue you a 1098-T, even though you had scholarships and grants that exceed your tuition. If they absolutely will not do it, your parents are still allowed to claim the American Opportunity Tax Credit, but the IRS will question it. You will have to provide documentation from the school showing the amount of tuition you paid (a receipt or financial statement) AND you will have to correctly calculate the amount of scholarships and grants to include in your own (the student's) taxable income.
Does this apply to international students as well?
If the international student is wanting to declare themselves to be a resident of the US and to declare that they will pay US income tax on all their worldwide income, they should talk to a CPA about the future implications of that declaration. Then, they can file a normal 1040 (not 1040-NR) and claim the education credit. If they do not want to be taxed (or chased) by the IRS in the future, I don't suggest international students try to claim US tax credits.
What do I do if my pell grants paid for all my classes so my school never filed a 1098t form for me. Do I still need the form or no?
You don't NEED the form, but if you pay attention to the videos on my channel, you'll see that you may WANT to ask them for the form. It depends on many factors, like whether you're a dependent, your parents' income, your income, your scholarship amount, etc. In most cases, however, using the 1098T correctly (which is quite difficult and most people use it wrong) will result in an $800-2500 tax refund.
@@collegetaxrefunds thank you
@@Ssamell123 you're welcome. Thanks for the question
how do you file 1098T box 4 information
Thanks for the question! The answer is complicated. It depends on what the adjustment was for. Do you know what it was for? What are the amounts in box 1, 4, 5, and any other boxes with data?
What if you have twins? Can you claim it for both children?
YES! Each child gets the credit up to 4 times. If a parent like you is just learning about this after the kids have been in college a few years, you can go back and claim up to $2500 per child per year (depending on your tax situation). Big pay day!
This is my 3rd year of college and they are saying I don't qualify for the American Opportunity credit because Scholarships exceed the education expenses even though I'm showing the difference as income. Also, states there were no net education expenses. I did input my 1098- My Turbo Tax didn't even start the form 8863. What can I do.
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Turbo Tax does not know how to claim the education credits when your scholarships and grants exceed your tuition. For this reason, TurboTax will usually cost you at least $1000 in missed tax credits, even if the program is "free." Whoever prepares your tax return needs to include not just the excess scholarships and grants in your income but an additional $2000-4000 more (the amount can be tricky and depends on a number of things). THEN, when you have included enough scholarships in your taxable income, the person who is claiming you as a dependent (or you, if no one else can claim you) will be able to enter your tuition LESS the amount of TAX FREE financial aid on Form 8863. At this point, that amount will be $2000-4000, and that will enable you to claim the American Opportunity tax credit. This entire process is very complicated, but worth up to $2500. If you have additional questions, please contact me directly at SteveHuntCPA at CollegeTaxRefunds dot com (turn that into a standard email address)
so you should change your w-4 so you get more take home pay so you have to owe plenty of taxes so you can get the maximum credit for education
This is incorrect. The amount of taxes withheld from your paycheck has absolutely nothing to do with the amount of the education credit you will qualify for. The goal with your W-4 should generally be to withhold exactly the correct amount of tax from your paycheck so that you do not owe any additional tax at the end of the year and so that your refund is zero.
im currently filing taxes and was told that my personal income needs to be higher than my scholarships amount does this still qualify now in my situation?
Thanks for your comment. I'm not sure I understand the question. I cannot think of a situation where your earned income needs to be more than the scholarship amount, but it does need to be more than the amount of qualified expenses you claim for the education credits.
In summary, through AOC, you can get education credits of up to $2500 or maximum $1,000 refunded. What is the $800 dollars you are talking about? Is that minimum amount refunded to student that is filing on their own?
$800 is the refundable portion of the credit when you claim $2000 of qualified expenses. Everyone should claim at least that much.
@@collegetaxrefundswow eye opening
So is box 5 the amount of scholarships or loans that I accepted because I never accepted any?
It's scholarships and grants that you received.
what the cost of your service thanks james
Hey thanks for reaching out. We perform lots of services at varying costs. Our goal is to increase your income after considering our costs and taxes. Most of the time, we are able to help students claim 3-4 times more from the IRS than they pay to us (and they didn't even know that money was available). So, for most of our clients, our service is basically just giving them free money. But in order to know if you qualify, we have to look at your old tax returns to see if we can claim any money for you. We will examine your old taxes for free and let you know if there is any money to be claimed. You can email me your specific situation at (remove the spaces and change the at to @
Hi Very informative video. My son got 1098T and he has full ride scholarship but box 5 is more then box 1. So as per rule I have to file 1098T cause I claim him as dependent though he doesn't receive any money in cash out of the scholarship. It pays for all his tutition and living expenses. Can I still claim AOTC? Please advise asap if I can include 1098T in my tax returns and claim AOTC. thanks
Thanks for watching and for your question! Something you said makes me wonder if this strategy is going to work for you. You said your son doesn't receive any money in cash out of the scholarship, but it covers his living expenses. How much are the living expenses? If his total scholarships were more than the tuition and living expenses, would they give him a check for the extra, or is there a policy against that? The answers to these questions will help us decide if you can claim the American opportunity tax credit for him. If you can, you will need to report a certain amount of his scholarship as income on his taxes, and then you will need to claim the tuition as an expense/credit on your taxes. Let's take it one step at a time.
Similar situation here. All scholarship money is paid to the school for all expenses and not accessible to student. My difference is that my kid took out a 2k loan.
@@mariabarr2175 as long as your scholarship can be used for living expenses, then part of it it can (and should) be included in your student's taxable income, enabling you to claim the American opportunity tax credit for your student. You may NOT use tuition to claim the credit if it was paid for by TAX FREE scholarships, but if you include the right amount of those scholarships in taxable income, then the tuition was NOT paid by TAX FREE scholarships, which enables you to claim the tuition as being paid by the loan or by your other taxable income. Then you can claim the education credit on your taxes, which is very valuable.
@@collegetaxrefunds Similar situation as kanamkan, the scholarship pays for the room and board at the dorms. Box 1 only shows the tuition, box 5 has more because it includes the scholarship amount that goes directly to the school for the room and board. How would I go about claiming this and getting the AOTC? Thank you.
@@AA-ho5mg For all those in a similar situation - if the scholarship is being used for NON-qualified expenses (ie., room & board and other expenses that are NOT tuition and required books and materials), then the scholarship IS taxable. ALL of the scholarship that is received by the student or by the school on behalf of the student that is MORE than the qualified tuition and required books & materials MUST be included in the STUDENT'S taxable income as "taxable scholarship" on Schedule 1 of the STUDENT'S tax return.
For example: The school reports $9,500 of tuition in Box 1 and $18,000 of scholarships and grants in Box 5 of the student's 1098-T. The student never received any of that money; the extra scholarship was simply applied by the school towards room & board and other NON-qualified expenses of the student. In this example, the student also had $500 of required books and materials that they had to purchase that was NOT included in Box 1. It doesn't matter if the student paid for these out of pocket, with their own earned or unearned income, with their parents' income, or with a student loan or if the school simply paid these expenses with the scholarships and grants - the extra $500 of required books and materials brings the total amount of qualified expenses to $10,000. This means the EXCESS scholarship is $8,000 ($18,000 - $10,000). All $8,000 MUST be included in the taxable income of the STUDENT, no matter what you choose to do next.
IF it makes sense, the student can also CHOOSE to include up to $4,000 MORE of the scholarships and grants in their taxable income. By choosing to include more scholarships and grants in their taxable income, the student becomes eligible to receive the American Opportunity tax credit. This credit can NOT be claimed for any student whose qualified tuition and related expenses were entirely paid for by non-taxable financial aid. But if the student in this example CHOOSES to include an additional $4,000 of scholarship in their taxable income (total taxable scholarship: $12,000), now they are eligible to use up to $4,000 of qualified tuition and related expenses to claim the American Opportunity tax credit. If the student only elected to include an additional $3,000 of scholarships in their taxable income (total taxable scholarships: $11,000), then they could only report up to $3,000 of qualified expenses for the American Opportunity tax credit.
Finally, the student can only claim the American Opportunity tax credit (AOTC) if the student provided more than half of their own financial support with their own EARNED income. The student can only claim the AOTC if they had enough EARNED income (from a job) to actually pay their qualified tuition and related expenses. The student can NOT claim the AOTC if they could have been claimed as a dependent by anyone else. In that case, whoever can claim the student as a dependent must also be the one to claim the AOTC for the student.
But even if the parents, grandparents, or someone else claims the student as a dependent and claims the AOTC for the student, the STUDENT still reports the scholarships and grants as taxable on the STUDENT'S tax return.
If it is not as clear as day to you at this point, I strongly recommend you reach out to me at Steve Hunt CPA at College Tax Refunds dot com and let me prepare the tax returns for you, otherwise you run the risk of doing it wrong, having it rejected by the IRS, and causing them to deny the AOTC for you for all four years.
Hi, if parents are claiming an eligible college student as a dependent, then the parents can claim the American Opportunity Tax credit on the parents return? So the college dependent will file their own return just to claim a partial amount of scholarship income (in order for the parents to claim the AOC on their return)? So there will be two income tax returns that need to be filed? A tax return for the parents and another tax return for the student? Thank you
This is correct. But the student only needs to file a return if their total income (including the scholarship they want to include) is high enough to meet the filing requirements.
@@collegetaxrefundsAmazing thank you
One should go to the IRS Interactive Tax Assistance tool to double check to see if the dependent student needs to file a return. Good stuff
@@almaur703 Good suggestion!
@@collegetaxrefunds Very helpful. If the dependent student chose not to file a return, how does IRS determine if a partial or all amount of scholarship to be claimed as income? Thanks!
The more I read about the AOTC, I find myself confused. Can a student that is single, let's say is 32 years old (never completed 4 year college), qualify to claim the AOTC?
Yes, a 32-year-old student who is working on their first 4-year degree who has not claimed the AOTC 4 times and who is enrolled more than half time in a qualified degree-seeking program can claim the AOTC with their qualified tuition, as long as they do not have a felony drug conviction.
My taxes were prepared by a new CPA. I forgot to give him these two form for two daughters. I owe taxes, if he uses these two forms will this reduce my tax I currently owe
It might. If your daughters were your dependents and undergraduate students who had at least $4000 each in tuition, fees, and required books that were NOT paid for with scholarships and grants, your CPA should easily be able to use that information to reduce your taxes by $2000-5000 (as long as your income is below about $160k).
However, if your daughters were not undergraduate students, not your dependents, or if their total qualified educational expenses were lower than $4000 each, or if your income is higher than $160k, the results will be different.
But the most challenging scenario will be if part or all of your daughters tuition and books was paid by scholarships and grants. In that case, your new CPA will most likely not be familiar with the correct way to report a portion of those scholarships and grants as taxable so that they can claim the $2000-5000 in education credits.
If your CPA is unable to get you a $1000 "American opportunity tax credit" for each of your daughters, I would need some more specific information about your income and your daughter's 1098-T forms to tell you if your CPA is doing it right. You can reach out at collegetaxrefunds.com/contact.
What is a good way to contact you, I've been doing my son's tax returns & I think I did it totally wrong all 3 previous years, can you help? and how can I contact you.
Thanks for reaching out. I saw you emailed me. Anyone else can also contact me by emailing SteveHuntCPA at CollegeTaxRefunds dot com
Do I have to file the form at all? I got no scholarships and paid only 86 dollars of tuition. I don't want the credit this year, I want it next year at University sir?
You do not need to report anything on your taxes. I recommend you follow the plan you have outlined.
If my job pays for college. Can I still claim the AOTC?
It depends on how the tuition is being paid and whether it is being reported to you as taxable income. If you have more questions or need additional help, please email me directly at SteveHuntCPA at CollegeTaxRefunds dot com (turn that into a standard email address).
So who adds this amount? My 19 yrs old daughter on her taxes or me on my taxes ?
If you can claim your daughter as your dependent on your taxes, then YOU must claim the education credits on YOUR tax return. However, you only qualify if your income is below $90,000 ($180,000 if married). Additionally, if your daughter's tuition (box 1) is not at least $4000 more than her scholarships and grants (box 5) on the 1098-T, then your DAUGHTER must include some of her scholarship income on HER tax return. Determining the exact amount is tricky, and doing it wrong can cause issues with the IRS or can reduce your family's tax refund. I'm sorry it's so complicated. That's just the nature of this tax credit. If you need additional help, you can send me more information at SteveHuntCPA at CollegeTaxRefunds dot com (turn that into an email address), and I can help you prepare your taxes this year.
Steve Hunt, viewers are getting confused because of how you explain the amended return. I interpret your overview of how to amend is that it's a student that's amending the return. In your scenario, the student is not claimed as a dependent, the student claims the AOC, and also includes a portion of the scholarship in income.
Parents with dependent students view this amended return scenario and they are led to believe that's how parents should amend. By including a portion of the student's scholarship income in the parents income in the amended return. What do you think? PLEASE correct me if I am wrong.
You are correct that the student must always be the one to include the Scholarships in their taxable income. The parent never includes the scholarship income, even if the parent is the one claiming the education credit. I have posted a new comment explaining this and pinned it to the top of the comments. Unfortunately, even if I explain this clearly in classes and videos, it is still confusing and misunderstood by many people. This is just a complicated area of tax law that many people (including many IRS agents) get wrong. I suggest that if taxpayers don't thoroughly understand the related pages of Publication 970 that they get assistance from CollegeTaxRefunds or someone who does thoroughly understand those pages. Getting it wrong causes IRS challenges. The IRS will challenge you 25 percent of the time even when you do it right.
Are you still helping to claim with money we missed in the past I tried searching your website but it doesn’t come out.
The website struggled and eventually died because of the pandemic. I can still help individually, as I'm still a CPA. Email me @ "stevehuntcpa @ college tax refunds .com". remove all the spaces from that.
So let’s say I was a student in 2020 and 2021 can I still claim the 2,500 for being a full time student in 2020 and finishing up in 2021 as a graduating student
Thanks for the question. Yes, you can claim the American opportunity tax credit in 2020 and 2021, as long as you 1) did not complete your first 4-year degree BEFORE the beginning of the tax year (i.e., 2021), 2) were working towards your first 4-year degree as enrolled at least half time for at least one semester, 3) no one has already claimed the American opportunity tax credit for you (4 times is the limit), and 4) you don't have a felony conviction for drug possession.
We got 1098-T for my kid with $39,000 in box 1 and $50,000 in box 5. What amount is the taxable amount and how to report it. I'm afraid my H&R Block software is not doing it right.
The taxable amount depends on several things, like whether your kid is your dependent, your gross income and your kids' gross income, whether any of you qualify for the earned income credit, how much your kid spent on all educational expenses, and more. It's very likely that H&R Block software is doing it wrong, and it's possible you could miss up to $2500 because of the error. I can't answer your question without more information. Please feel free to reach out to me at SteveHuntCPA at CollegeTaxRefunds dot com if you haven't already.
I am so grateful for your video. I have researched this deeper and my head hurts, because everybody always says "the student reports all his scholarship up to the amount needed to claim the credit". HUH???? Please, sir, what IS that amount??
Unfortunately, it is not an easy question to answer. The student must claim all of their excess scholarship as taxable. This means everything beyond their tuition and required books. At that point, however, the parent and student are still not allowed to claim the education credit, because all of the tuition and required books were covered by tax-free scholarships. In order to claim the education credit, you have to reduce your tuition and required books by the amount of tax-free scholarships. Since your tax-free scholarship equals your tuition and required books, you have no tuition and required books left with which to claim the credit. In order to claim the education credit, you now need to include in the student's taxable income an additional amount of scholarship that is equal to the amount of tuition and required books that you would like to claim for the education credit. Usually, this is at least $2,000, but not more than $4,000.
In summary, the amount of scholarship that most students should include in their taxable income is everything in excess of their tuition and required books plus $2,000 to $4,000. This allows the parent, or the student if they are not a dependent, to claim $2,000 to $4,000 of qualified tuition and related expenses towards the education credits.
I'll try to give an example using numbers.
Assume your student has $6,000 of tuition and required books, which is $5000 in box one on their 1098-T Plus a thousand dollars of books, and they have $13,000 of scholarships or grants, which is box 5.
By law, the student must include $7,000 of their scholarship in income, because their scholarship exceeds their tuition and required books by $7,000. However, most tax software, most CPAs, and even the IRS will tell you that this is not necessary. That is the way everyone has been trained. However, the law technically says that the excess scholarship must be reported as taxable.
At this point, $7,000 was taxable, and $6,000 of scholarship was tax-free. The tax-free scholarship is assumed to be used to pay the required books and tuition costs. This leaves no tuition costs or books available to claim the education credit.
In order for the parents, or the student if they are not a dependent, to claim the education credit, the student must include additional scholarships in their income.
Usually, it will benefit the family to claim at least $2,000 of tuition towards the American opportunity tax credit. When you claim $2,000 of tuition towards the credit, you can receive a tax credit of up to $2,000. In order for the family to claim $2,000 of tuition towards the tax credit, the student must include an additional $2,000 of scholarship in their income.
At this point, the student will have included $9,000 of scholarship in their taxable income, and then the family can claim a $2,000 American opportunity tax credit, because $2,000 of the tuition was paid for with taxed income, such as wages or even loans.
In order for the family to claim the last $500 of the American opportunity tax credit, the student must include an additional $2,000 of scholarship in their taxable income. This allows the family to report an additional $2,000 of tuition as qualified tuition towards the education credits. However, the additional $500 of Education credit is sometimes not worth the increase in tax that the student might pay if they include an additional $2,000 of scholarship in their taxable income.
Therefore, it can be a challenge to determine exactly how much scholarship the student should include in their taxable income. If they include too much scholarship in their taxable income, they could end up paying too much in tax, or they're earned income credit might decrease. But if they don't include enough scholarship in their taxable income, then they will not be allowed to claim the maximum American opportunity tax credit.
I hope that made sense. It really is a very challenging area of tax law. Most people get it wrong. I spent almost a decade doing only this for my tax clients.
I also spent a good chunk of that decade arguing with the IRS about how this works. Even the IRS does not understand it.
@@collegetaxrefunds Ahh! This is the kind of "recipe" I was looking for. Now I understand where adding "up to 4K" comes in. Thank you again so much. It's clear you love what you do and I hope someday I am as happy in my career as you are! SUBSCRIBED FOR LIFE
I tried to look for my 1098 T form on my account but it said I had no data available. Do you know what the issue might be? Anyone?
Thanks for the question. You should Google the name of your school and 1098-T, and you'll usually discover how to download your 1098-T. However, if your scholarships and grants were more than your tuition, you may not have received a 1098T. In that case, you need to request that your financial account or bursar's office issue one for you. Tell them your CPA says you need it. But only if you understand the method that I teach on this channel, where you include some of the scholarships in your income in order to be able to claim the American opportunity tax credit.
I am an independent undergraduate student. Box 5 is greater than box 1. As soon as I input the info from theses boxes into turbo tax my entire refund goes away and it estimates about $1,100 OWED. am I stuck owing money or is there something I can do?
Thanks for the question.
Assuming you entered the information from your 1098T into TurboTax correctly, the reason you are not getting a refund is because your parents CAN claim you as their dependent, even if they choose not to. They should claim you as their dependent and enter the 1098T information into THEIR tax return, and if their income is not too high, they will get a larger refund (up to $2500 more), which they might be willing to share with you.
If you believe they should not be allowed to claim you as a dependent, please let me know all the ways they financially support you and who pays for your housing, food, transportation, healthcare, entertainment, and everything else, and we can discuss options for you.
@@collegetaxrefunds I am 28 so, I don’t think they can claim me as a dependent. I got married this year so my wife and I are filing jointly. She works full time and I’m in school full time finishing my degree. the combination of her income and my grants/scholarships/loans cover our living expenses. Thank you for the reply and let me know if I have any options.
@@zachleetch8138 ok perfect. Thanks for your reply. Is there any possible chance that you or your parents claimed the American opportunity tax credit for you in any previous year? This is incredibly important and may require looking at all previous tax returns (yours and your parents') when you were a student.
If not, what you need to do is difficult. TurboTax simply doesn't do this correctly for students. You must find the place in TurboTax where you enter TAXABLE scholarships. It might be in a section for OTHER income. Enter there the result of this calculation:
Box 5 - Box 1 - total required books + $4000.
Then SUBTRACT that exact same number from Box 5 when you enter your 1098T information into TurboTax.
If you do that correctly, you should see your taxable income increase by the amount we calculated, and it will say SCH on the wages line of your tax return. You also should see your American opportunity tax credit jump to $1000 and your Education credit jump to as high as $1500.
Let me know how it goes.
If that's not what happens, OR if your Earned Income Credit drops, OR if you can't figure out how to do what I'm saying, then there is more we need to do together.
This is a very challenging area of tax law, and TurboTax just doesn't do it right.
@@collegetaxrefunds I really appreciate the detailed reply. I’ll look into past filings. If I haven’t previously claimed the credit, I think I can follow along with your instructions just as well. I’ll reach out if I have any hiccups. Thanks again!
@@zachleetch8138 sounds good.
You can claim the credit (or any part of it) 4 times total. It's for undergraduate students working on their first 4-year degree who are more than half time students.
Interesting, but you never said where u put the 1098t on your 1040
I actually did, starting at 12:09
But it's very confusing, technical, and not easy to do if you're using TurboTax or you don't understand tax laws. Also, I know I need to make a new video. This info is dated.
If you are reporting excess scholarships (SOME but not all of the amount from box 5 on the 1098-T), you put it on the taxable scholarships line of schedule 1. When you are claiming the tuition for the education credits (SOME but not all of the amount from box 1) you put it on form 8863 page 2.
You can email me at Steve Hunt CPA at College Tax Refunds dot com for help with your specific situation.
What if I'm filing myself? Where do I put this information on my 1040?
Unfortunately, the answer to this question is extremely complicated. It depends on 1) if you can be claimed as a dependent by someone else, 2) your income, 3) your tuition amount, 4) your scholarships, 5) your earned income credit, and several other factors. If you would like specific help, please email me at SteveHuntCPA at CollegeTaxRefunds dot com.
My daughter received the 1098T she graduated in july in Florida and now she is living in PR. She is my depedent. What I should do?
Thanks for reaching out to me on email. As I mentioned since most Puerto Rican citizens don't file or pay federal income tax, you will not qualify for this tax credit.