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Making payments

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Replies to: Making payments

  • 3kidsMultipleSports3kidsMultipleSports Registered User Posts: 122 Junior Member
    edited June 15
    I was just reading up on it .. https://www.irs.gov/individuals/education-credits-questions-and-answers

    " For the AOTC but not the LLC, qualified tuition and related expenses include amounts paid for books, supplies and equipment needed for a course of study. You do not have to buy the materials from the eligible educational institution. Add amounts paid for these materials to Form 8863 to your other adjusted qualified education expenses. The total of all qualified tuition and related expenses for calculating the AOTC cannot exceed $4,000 and as explained in Q&A 3, the maximum allowable credit is $2,500. See Qualified Education Expense for more information."

    So it looks like up to $2500 max can be claimed - the first $2000 and the 25% of the next $2000 provided you fall into the agi limits (married filing join < $180000) .. but room and board are not eligible expenses. So I guess the real question is - are his loans/parents portion applied to the balance of his tuition or toward room and board. I know his school issued scholarships go towards tuition. Do the external ones go towards room/board or tuition first? Looks like just have to wait for a 1098-T to show up and also keep careful documentation of book expenses and then see how it works out on taxes (in other words don't count on it, but it may be there)???
  • 3kidsMultipleSports3kidsMultipleSports Registered User Posts: 122 Junior Member
    edited June 15
    Found this :
    A5. In general, qualified tuition and related expenses for the education tax credits include tuition and required fees for the enrollment or attendance at eligible post-secondary educational institutions (including colleges, universities and trade schools). The expenses paid during the tax year must be for: an academic period that begins in the same tax year or an academic period that begins in the first three months of the following tax year.



    The following expenses do not qualify for the AOTC or the LLC:
    •Room and board
    •Transportation
    •Insurance
    •Medical expenses
    •Student fees, unless required as a condition of enrollment or attendance
    •Same expenses paid with tax-free educational assistance
    •Same expenses used for any other tax deduction, credit or educational benefit


    here https://www.irs.gov/individuals/education-credits-questions-and-answers
  • 3kidsMultipleSports3kidsMultipleSports Registered User Posts: 122 Junior Member
    I really appreciate the help .. I'll be experienced and answering questions by the time kid #2 gets there in a few years!
  • mommdcmommdc Registered User Posts: 8,608 Senior Member
    D has a scholarship that specifically covers tuition. Not all do, it depends.

    But we can still claim books and fees for the AOTC, which is still about $1500.

    And then D reports any grants and scholarships that cover room and board, as part of her taxable income on her tax return.

    I agree, you will be a pro soon. I know a lot more about this now than I did 2 years ago...

    Once my D had her room assignment for freshman year, we knew how much room and meal plan was, also the mandatory student and course fees posted on her account. We knew what aid was applied (they divided outside scholarships between the two semesters).

    You can then see the direct costs from the college, minus scholarships, grants and loans, minus what your son can pay from summer earnings. The rest should be what you pay, divided by however many installments.

    The first installment might be due before the bill comes out, so you might have to estimate. Maybe the college will recalculate the payment amount once all final charges and credits are known.
  • thumper1thumper1 Registered User Posts: 63,059 Senior Member
    We always HS to estimate our payment plan. It started in July. You could start it in August...but then you paid both July and August in August.

    We used two different services...and in both cases, you could adjust the payments if you estimated wrong.

    We called it our mystery money. It went into my accounts via direct deposit...and out via auto withdrawal.

    Both of our payment plans were companies with which the college contracted. .
  • 3kidsMultipleSports3kidsMultipleSports Registered User Posts: 122 Junior Member
    @mommdc - I was told (by a school finance person) that the outside scholarships will likely apply all to the semester the are received because they cannot split them (the school scholarships are split). Room/dorm assignments come mid July so that will help us firm up those costs. They did say they will recalculate the payments if the scholarships don't arrive before the first estimates.
  • 3kidsMultipleSports3kidsMultipleSports Registered User Posts: 122 Junior Member
    @thumper1 - HS? It does show first installment due July 25th when we get ready to go. He has orientation coming up this week so I hope to get more details then. And I am with you on the direct deposit, auto withdrawal - that may very well be our approach too!
  • thumper1thumper1 Registered User Posts: 63,059 Senior Member
    Auto correct...HS should be HAD.
  • 3kidsMultipleSports3kidsMultipleSports Registered User Posts: 122 Junior Member
    that makes sense @thumper1 - thanks!
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