artp Posted February 20 Report Posted February 20 Client filed MFJ in 2013 and 2024. His son graduated college May 2024. 2024 1098-T Box 1 blank, box 5 $7000. Client paid spring 2024 semester $8500 in Dec 2023. Nothing paid in calendar 2024 as far as he reported to me. For 2023 1098-T Box 1 $31,000, Box 5 $14,000. Client AGI > $200,000 in both 2023and 2024 so no AOTC claimed either year. Do we have a reporting problem for the $7000? Art Quote
Lion EA Posted February 20 Report Posted February 20 You have a 2024 reporting requirement for the $7,000. Have the student get his bursar's statement for 2024 to see exact dates for 2024 transactions. Also, did the student purchase books/supplies/equipment in 2024 that can apply to his $7,000 scholarship/grant? Quote
artp Posted February 20 Author Report Posted February 20 Lion EA So client gets double whammy. He could not claim any AOTC in 2023 or 2024 because of income limitations and because he prepaid the spring 2025 semester in Dec 2023 instead of paying it in Jan 2024 which would have more than offset the $7000 of scholarship, the student has to pick up $7000 of income unless we can come up with some other college expenses that were paid in 2024. What a bite! Quote
kathyc2 Posted February 20 Report Posted February 20 39 minutes ago, artp said: So client gets double whammy. He could not claim any AOTC in 2023 or 2024 because of income limitations and because he prepaid the spring 2025 semester in Dec 2023 instead of paying it in Jan 2024 which would have more than offset the $7000 of scholarship, the student has to pick up $7000 of income unless we can come up with some other college expenses that were paid in 2024. What a bite! No. If properly prepared the 2023 form would have a check mark in Box 7. It's just a timing issue not a taxable issue.. 3 Quote
Lion EA Posted February 20 Report Posted February 20 Get the bursar's statement to see what can be done for 2024. And, qualifying expenses, such as books. If the parents made too much money to benefit from the AOTC in prior years, for those years they can choose to NOT claim the college student dependent. The college student still checks that he is able to be claimed by another/does NOT claim his own dependency, but then he CAN claim the nonrefundable part of the AOTC. See if filing some amendments can get some monies back for this family. 2 Quote
artp Posted February 21 Author Report Posted February 21 15 hours ago, kathyc2 said: No. If properly prepared the 2023 form would have a check mark in Box 7. It's just a timing issue not a taxable issue.. It was checked so if there was a sufficient payment applied to 2024 that exceeded the $7000 of scholarship we should be OK for 2024 and the son has no taxable scholarship to report in 2024, right? Art 2 Quote
artp Posted February 22 Author Report Posted February 22 On 2/20/2025 at 5:29 PM, Lion EA said: Get the bursar's statement to see what can be done for 2024. And, qualifying expenses, such as books. If the parents made too much money to benefit from the AOTC in prior years, for those years they can choose to NOT claim the college student dependent. The college student still checks that he is able to be claimed by another/does NOT claim his own dependency, but then he CAN claim the nonrefundable part of the AOTC. See if filing some amendments can get some monies back for this family. Getting the son's W-2s and he will be claiming himself this year. Got the bursar's records and $8500 of student loan funds were applied to spring semester so we should be good to get some education credit on son's return. Thanks for everyone's replies..very much appreciated 1 Quote
Lion EA Posted February 23 Report Posted February 23 If son graduated May 2024, then he probably still qualifies as a dependent of his parents. Do your Due Diligence re whether he qualifies for the non-refundable AOTC only or also the refundable. Quote
jklcpa Posted February 23 Report Posted February 23 5 hours ago, artp said: Getting the son's W-2s and he will be claiming himself this year. Got the bursar's records and $8500 of student loan funds were applied to spring semester so we should be good to get some education credit on son's return. Thanks for everyone's replies..very much appreciated You should fill out the support worksheet, and remember that whoever took out that loan is the one that provided that $8500 of support, and the scholarship isn't used in the calc of support. 2 Quote
Sara EA Posted February 23 Report Posted February 23 Scholarships are generally nontaxable if used for qualified expenses. (Only those used for room and board, travel, etc. are taxable.) You don't have to report anything. If the AOC had been claimed in the prior year and reduced the qualified expenses, you would have to recapture some of the credit, but that isn't the case with your client. 1 Quote
artp Posted February 24 Author Report Posted February 24 The son started fully time employment and had over $28,000 of W-2 income so after filling out support worksheet he is supporting himself. He took out the loan in his name; dad co-signed the loan. Art 1 Quote
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