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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3755
Experience:  Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
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I need to speak with a tax expert on education credits and

Resolved Question:

I need to speak with a tax expert on education credits and Scholarship grants. This is very important to me and I must have 100% good advice. I am a tax preparer registered with IRS with PTIN number . I have completed a clients tax return and I am sure it is wrong..so I need to get it very clear in my mind as this client will grill me. There are two areas on the 1040 which I believe are very suspicious and need to be sorted out before I dare release this tax return to the client. basically my concern is the client has two children in college(different colleges) I have 1098-T on each of them and I have claimed them both on my clients tax return. The client is Head of Household. When I looked at the return I noticed the client was only getting ONE American Opportunity credit...why not two since she is paying tuition for them both. Then I noticed that Barry the eldest one born 4/30/1981 had scholarship income in Box 5 of $21217 and qualified tuition Box 1 of $13416.36. Therefore he has taxable income of $7801. So this is what I need to talk to an expert about. Does Barry therefor have to submit a separate tax return from his mother, she (mother) will not therefore claim him as a dependant.
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

NPVAdvisor :

Hi,

NPVAdvisor :

The AEOC has to be offset by any other education assistance

NPVAdvisor :

If he has a scholarship in excess of the tuition amouinty then he will not get the credit

NPVAdvisor :

sorry for the typo (tuition "amount")

NPVAdvisor :

Here's the IRS guidance:

NPVAdvisor :

How much is the American opportunity tax credit worth?


A. It is a tax credit of up to $2,500 of the cost of tuition, fees and course materials paid during the taxable year. Also, 40% of the credit (up to $1,000) is refundable. This means you can get it even if you owe no tax.

NPVAdvisor :

TUition fees and course materials

NPVAdvisor :

so if the tuition is being covered by the scholarship, he's not leigible

NPVAdvisor :

ON thought, if you can get books, lab supplies, software and other class materials that can qualify for the tax credit, you may be able to get a partial credit - if these PLUS the tuition and fees end up being more than the scholarship

NPVAdvisor :

Questons?

NPVAdvisor :

Gosh, I just caught something else (and this is the MOST important piece) if you listed Barry's birth year correctly that makes him 32 YEARS OLD

NPVAdvisor :

She shouldn't be claiming his as a dependant anyway, unless therare disability issues

NPVAdvisor :

I still don't see you coming into the chat ... I'll move us to the "Question and Answer" mode ... maybe hat will help

NPVAdvisor :

(We can still continue a dialogue there, just not in real-time as we can here)

Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 3755
Experience: Juris Doctorate, CFP and MBA, Providing Financial & Tax advice since 1986
Lane and other Tax Specialists are ready to help you
Expert:  Lane replied 1 year ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

What happens now?

If you haven’t already done so, please rate your answer above. Or, you can reply to me using the box below.
Expert:  Lane replied 1 year ago.


Hi Barry,

... just checking back in, as I never saw you coming into the chat.

Let me know if I can help further.


However, is this HAS given you enough information, I'd appreciate a positive rating of 3(OK) or better. That's the only way they'll pay us here.

Let me know ...

Lane
Customer: replied 1 year ago.

I need to speak personally with the advisor. I can be43 called on(NNN) NNN-NNNN My SPECIFIC were not answered to my satisfaction.

 

 

Barry Robinson

Expert:  Lane replied 1 year ago.

 

Yes, Barry, the student should do his own return,

 

and yes, the tax credit (if he were eligible based on age), would be limited (effectively erased) by the scholarship

 

Lane

 

 

...would appreciate your updating the rating.

 

 

 

But if you need more on this, let me know.

 

Lane

 

 

 

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