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IRS 1099-T Questions

arabrabarabrab Posts: 4,700Registered User Senior Member
edited February 2010 in Parents Forum
Well, D just got her first 1099-T, and I'm puzzled. It is under her social security number, though we were the ones who paid the bills. Okay....
1. Box 1 (payments received for qualified tuition and expenses) is blank.
2. Box 2 has an amount billed for qualified tuition and expenses of $20,229.
3. Box 5 shows the $8250 in fall semester scholarships. (That number agrees with my numbers. Its the only number that agrees with my numbers.)
4. Box 7 is checked, indicating that that the amount in box 1 or 2 includes some amounts for terms beginning Jan-Mar 2010.

So I'm not sure what I'm supposed to do with this form? At D's school, you pay everything into a single student account; they don't track eligible and ineligible expenses from different pots. Can I just assume that the scholarship money was used to pay eligible expenses? Can I assume that the first dollars we paid were always for eligible expenses? Do I just figure out eligible expenses on my own? With respect to the fees I paid in December, 2009 (which were due in late December but which applied to the spring semester's costs, some of which were tuition, some of which were fees, some of which were housing/meal plan related) - do I get to say which my money paid for? Do I care?

Some of the payments into her account came from the 529 plan.

As long as the scholarship amounts plus the amount paid by the 529 were less than the cost of tuition, am I right in thinking that my D does not need to report the scholarship on a tax return?

I'm usually pretty good on the tax front, but this is a 1098 that leaves me very confused, and I'm hoping that someone here can provide some explanation (or direction to some explanation) of how we're supposed to work with this form.
Post edited by arabrab on
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Replies to: IRS 1099-T Questions

  • SEA_tideSEA_tide Posts: 3,659Registered User Senior Member
    AFAIK, you can't claim housing and meal expenses. I think the law changed to allow you to claim textbooks though. There should be an itemized fee list somewhere for your D's school. If you claim her as a dependent, it is filed under your taxes. Scholarships pay for tuition and fees first, then other things. Otherwise, your D could have ended up owing taxes.

    I'm not aware of how a 529 works right now, so I can't help you there. As for payments made in 2009 for school terms beginning between January and March of 2010, you can use those payments in your 2009 taxes or not, your choice. You cannot, however, claim those expenses in 2010 according to the paper I got with my 1098-T.

    I hope this helped a little bit, good luck with your taxes.
  • flatlandflatland Posts: 64Registered User Junior Member
    Check IRS Publication 970 Tax Benefits for Education pg 23.
  • arabrabarabrab Posts: 4,700Registered User Senior Member
    Thanks. I'm still confused about whether we just get to declare what the money was used for (that is, the money paid in Dec. 09 for Spring 2010 partial tuition and fees and room and board) -- since I've already maxed out our 2009 tax credit expenditures, can I simply decide that the money I paid in Dec '09 was for room & board, but the money I paid in Jan 10 is for tuition? (Again, at D's school it all goes into one pot.)
  • 'rentof2'rentof2 Posts: 4,327Registered User Senior Member
    It is confusing, arabrab. I unfortunately don't have a clear answer for you, but I'm responding to bump this up and hopefully get input from others.

    My son's school also lumps all the money into a "comprehensive fee" -- I muddled through this last year when I did my taxes, but I honestly don't remember exactly how I settled on doing it. I do recall reading the IRS 970 form and not finding it particularly clarifying... so I just took a stab at it.

    I believe you are free to either keep your payments organized by the calendar year *or* do the payment for the 1st 3 months of the year deal... as you wish... as long as it's consistent and doesn't double dip from one year to the next.

    As to the room&board in '09 and the tuition in '10... I look forward to seeing others' response.

    I went ahead and did mine last year by just using the numbers on the 1099T (which included the costs for spring semester) just for the sake of ease. I'll stay with that plan because I find the whole thing so flummoxing that I may as well do the best I can with the forms I receive as they are printed. Heaven forbid I should get in there with my limited skills and try to dice things up in a legitmate and coherent way.
  • somemomsomemom Posts: 9,275Registered User Senior Member
    I have always just gone by the numbers provided by the school, as there was not a significant enough difference any year in having to track it each year. I would prefer the tax return #s match the tax form.

    Box 2 should be qualified expenses- so $20k less $8k in grants, so you still have a net tuition expense to report.

    As far as I can tell you must report it all on the kids return, which can cause a tax liability, especially at a public with lower tuition & higher R&B (like a UC)
  • swimcatsmomswimcatsmom Posts: 14,996Registered User Senior Member
    I do a spreadsheet of expenses and how they were paid for. Sounds like overkill but it gets complicated between Scholarships, grants, loans, 529 account money on one side of the equation and tuition/fees/books/room and board/internet/computer on the other, with possible taxes/possible tax credits thrown into the middle of it all. The spread sheet helps me keep it all straight and attempt to maximize any tax benefits and/or minimize any taxes.

    The schools does not break this stuff down. As far as I can ascertain unless a scholarship or grant is exclusively for a particular expense (eg tuition waiver, dorm fee waiver) you can elect what money paid for what expenses. For instance my daughter has a tuition waiver so that can only be treated as a scholarship for tuition for tax purposes. So that is tax free because it is used for tuition. The other part of her scholarship is a cash scholarship that can be used for whatever we choose. So we can choose to use it for fees (which would make it tax free) or room and board (which would make it taxable). The 529 account money can be used for tuition/fees/books/room&board (or rent and food up to the amount in the COA for room and board)/a computer(for 2009&2010)/internet (for 2009&2010). I don't really worry too much about tying the tax return to what the 1098 says. I just make sure I have records of everything to support how I am doing the return. For instance I print off a copy of the COA showing the COA for room and board & will have my daughter give me a copy of her internet bill so that if I am ever asked what the 529 account funds were used for I have the documentation to support it.

    I have all this to do in the next couple of weeks. Mine and both my kids. Fun stuff.
  • swimcatsmomswimcatsmom Posts: 14,996Registered User Senior Member
    It is under her social security number, though we were the ones who paid the bills. Okay....
    If any of the scholarships/grants were taxable (in excess of qualified education expenses) that would have to go on your daughter's tax return.

    If she is a dependent on your tax return and you are eligible for any of the tax credits you are considered to have paid the expenses (whether you did or not) and are eligible for the credits.

    If she cannot be claimed as a dependent on your return, so claims her own personal exemption on her tax return, then she is considered to have paid the expenses (whether she did or not) and only she can claim the credits.
  • xiggixiggi Posts: 22,890Registered User Senior Member
    As long as the scholarship amounts plus the amount paid by the 529 were less than the cost of tuition, am I right in thinking that my D does not need to report the scholarship on a tax return?

    That should be the case for this year, and probably will remain the case in the following years. However, you might want to project the numbers for 2010 considering that the school reported two semesters of tuition and (seemingly) one semester of scholarship income. If the school reverses this procedure for 2010, you might have taxable income because of the uneven returns.

    In theory, you can report different incomes as long as you keep it consistent. In case you depart from the 1099, I would recommend to keep meticulous records and probably prepare a mock tax return for your D. Print it and keep in a file ... just in case.

    Fwiw, you should prepare yourself to be confused every year, as the numbers reported by the schools rarely match the payments and expenses. To make things worse, schools routinely make changes to the following year's 1099.

    This is a matter that requires keeping good records from one year to the other, but not one that should keep you awake at night.
  • BCEagle91BCEagle91 Posts: 22,762Registered User Senior Member
    I just plug the numbers into my tax software and let it do the work.
  • 3bm1033bm103 Posts: 3,573Registered User Senior Member
    I just plug the numbers into my tax software and let it do the work.
    Not necessarily the best idea. I just plugged my son's information into three different tax programs to see how they handled it and got three different results. Maybe by the end of tax season after all three programs have been updated it will be better.
  • thumper1thumper1 Posts: 36,991Registered User Senior Member
    Isn't it a 1098 T (not 1099)? I'm looking at my son's 1098T right now. Box 2 clearly says "Amounts billed for qualified tuition and related expenses". That box would NOT include things like room and board. Then box 5 gives the amount of scholarships or grants. If your scholarship or grant box EXCEEDS the amount in box 2, it is taxable. I'm not a tax expert...so check to be sure. BUT this is what we have been told.
  • BCEagle91BCEagle91 Posts: 22,762Registered User Senior Member
    There was a thread on 1098s a while ago and that one of the common software programs was not up to speed on current tax laws. I think that the problem of the instructions not being updated is part of the problem. At any rate, I just put the numbers in and let it do the work. If there is a problem, I'm sure the IRS will send me a bill or a credit.
  • swimcatsmomswimcatsmom Posts: 14,996Registered User Senior Member
    The problem is a lot of stuff is not included on the 1098. Room and board (which is a qualified expense for 529 account withdrawals). Books (qualified expense for 529 account, and for the AO tax credit).

    When I was trying to figure out last year if it was possible to consider certain scholarships taxable so as to qualify for tax cre I found some interesting discussion here by CPAs on the web. For instance
    Navigating the Form 1098-T Tuition Statement: Inconsistencies in Reporting
    In certain situations it may be beneficial to include otherwise excludible scholarships as income. Taxpayers may elect to report nontaxable amounts of certain scholarships as income when they would otherwise not qualify for education credits.
  • intparentintparent Posts: 13,276Registered User Senior Member
    BC, Turbotax did not handle this correctly for me last year (I had taken the distributions from the 529 to me, then paid D's bills to the college - - further complicated by the payment to the tuition management system the college uses to spread the payments out, which isn't necessarily when the college actually gets paid!). I had to manually manipulate the forms in Turbotax. I believe there were some tips people had posted on this in the Turbotax tips/help section where individuals can post questions. I haven't gotten to it this year and am a little hazy on last year's details (although I did write down what I did in my tax file so I could look it up when I get there this year...). But you can't just count on Turbotax, and I would look very carefully at the output of other tax programs as well.
  • swimcatsmomswimcatsmom Posts: 14,996Registered User Senior Member
    ^^^^ditto. Turbotax tried to make our 529 distribution taxable last year because it was paid to my husbaand, not the student or school. Our 529 account does not give us the option to have the check paid to the student. But the distribution was used to pay for qualified expenses so was not taxable.
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