form 8863

[JACKSORH]

Daughter is in her 2nd year of college with income of only $160.00. She received a scholarship of $55,000 and her education cost box 2 is $46,397. Her parents is claiming her as a dependent  and claiming the AOTC.  The parents AGI is 73,173.  What do we do with the excess of 8,603.   Parents stated that daughter used it for room and board off campus.  So is the excess taxable to parent or child.

[jasdlm]

Are you adding the scholarship income back in to the parents' income so you can claim the AOTC?  I'm not sure I'm following your post.  

[Lynn EA USTCP in Louisiana]

The excess scholarship is shown as income on the child's tax return.

 

[JACKSORH]

No, I'm not adding the excess (8,603) income back into the parents income because the scholarship is never treated as income to the parents.

[Hahn1040]

First check the actual financial transcripts from the college to see what was actually paid when and when the scholarship was applied.   In many cases the timing of the scholarships and tuition do not coincide with the 1098-T.  If the records show that, in fact, the scholarship exceeds qualified tuition, then it is reported on the Child's return.  It goes on line 7.  The standard deduction will take care of most of it.  For $8,000+ there will be some taxable.  at 10% tax- not bad for "free money"

[BulldogTom]

14 minutes ago, Hahn1040 said:

First check the actual financial transcripts from the college to see what was actually paid when and when the scholarship was applied.   In many cases the timing of the scholarships and tuition do not coincide with the 1098-T.  If the records show that, in fact, the scholarship exceeds qualified tuition, then it is reported on the Child's return.  It goes on line 7.  The standard deduction will take care of most of it.  For $8,000+ there will be some taxable.  at 10% tax- not bad for "free money"

Just had one of these situations.   Had to go back to the prior year and current year disbursement records.   Stanford still reports the 1098T on the school year quarterly system, but the disbursement records are very clear. 

24 minutes ago, Lynn EA USTCP in Louisiana said:

The excess scholarship is shown as income on the child's tax return.

 

Agree with this.   The excess scholarship goes to the child.   Any tax credits go to the return where the dependent resides.

Tom
Modesto, CA

[RitaB]

1 hour ago, JACKSORH said:

Daughter is in her 2nd year of college with income of only $160.00. She received a scholarship of $55,000 and her education cost box 2 is $46,397. Her parents is claiming her as a dependent  and claiming the AOTC.  The parents AGI is 73,173.  What do we do with the excess of 8,603.   Parents stated that daughter used it for room and board off campus.  So is the excess taxable to parent or child.

 

53 minutes ago, jasdlm said:

Are you adding the scholarship income back in to the parents' income so you can claim the AOTC?  I'm not sure I'm following your post.  

I'm wondering, too.   If the numbers on the 1098-T pan out (they probably will not, in my experience), and the excess is $8603, there would be no credit.

[grmy2h]

I've posted this before but for any new comers this is a good reference to use. 

https://www.treasury.gov/resource-center/tax-policy/Documents/Report-Pell-AOTC-Interaction-2014.pdf

[jasdlm]

 

1 hour ago, JACKSORH said:

No, I'm not adding the excess (8,603) income back into the parents income because the scholarship is never treated as income to the parents.

I am talking about adding back the scholarship or pell grant income, which exceeds the tuition amount at least as it is reported on the 1098-T, so that the AOTC can be claimed.  Your OP discusses parents taking the AOTC.

[JACKSORH]

OK Thanks to all of you that responded to my post.  lt is a pleasure to have so many astute tax practioners answering all of our queries when we need help.