Why oh Why Didn't my Kid Major in Accounting?

Paying for College
1

My son, who graduated in June of 2015, unfortunately was not an accounting major. Neither of us feels like we have cracked the tax code regarding education expenses and we certainly have not been able to decipher the 1098T! Please help!

Looking at his tuition statements it is pretty easy to follow the money. His school operates on quarters and the family received a bill in early December, 2014 for Winter Quarter 2015. We subtracted out the anticipated aid for Winter 2015 and paid the remainder of the bill in 2014. A portion of this payment was for tuition was used in calculating the American Opportunity tax credit on parents’ 2014 return.

At the end of December 2014 my son’s account showed a balance due of $14,241. This was equal to the scholarship amount that we anticipated would be applied to the account for Winter Quarter 2015. On January 1, 2015 the school posted a $14,241 scholarship to the account and the balance due was zero. The same process was repeated for spring quarter. They billed $14,878 for tuition and fees for Spring 2015. They credited the account for $14,241 in scholarship awards and we paid the remainder-$637. Here is a summary of what was posted in 2015:

Scholarship for 2015 Winter Quarter posted on 1-1-15 $14,241
Scholarship for 2015 Spring Quarter posted on 3-22-15 $14,241
---------
total $28,482

Tuition and fees billed for 2015 Spring Quarter $14,878
Payment received for tuition $637*

*difference between billed amt and scholarship amt (14,878-14,241)

Here is what appears on the 2015 1098T:
Box 2-Amounts billed for tuition $14,878
Box 5-Scholarships $42,723
Box 6-Adjustments for a prior year $14,241

Box 2 is correct. The difference between Box 5 and Box 6 is $28,482, the total amount of scholarships actually posted to his account in 2015. It is a mystery to me why it is not simply reported as $28,482 in Box 5.

I have a few questions:

  1. Does anyone understand the rhyme or reason as to why the scholarship numbers were presented on the 2015 1098T?
  2. He cannot be claimed as our dependent in 2015. Even though he was a full time student for at least five months, he provided more than half of his own support. The payment of $637 for tuition came from his account. We took American Opportunity credits for four years, so I know that tax break is not available to him. I thought he could take the Lifetime Learning credit or an adjustment for tuition payments (line 34 on the 1040) but my tax software says he is not eligible for either one. I think this is related to the weird way that the numbers are presented on the 1098T. It would probably not make a huge difference, but this is a kid just starting out—he is still sleeping on a mattress on the floor and every little bit means something!

Thanks so much for any advice.

2

You need to indicate your son is claiming his exemption.
What is the tax software?

3

Thanks for the response. The software is H&R Block Basic. I did indicate that he is claiming the exemption–I think that was the interview question about whether he provided more than half of his own support. Anwer-yes he did provide more than half.

4

You could try other free software

5

The problem is the 1098 T. The computer software is not going to figure a credit when the amount in box 5 is more than the amount in box 2. So you are trying to claim the lifetime learning credit for the $637, correct? I suggest getting rid of the 1098 T altogether. There is an option to enter education expenses without a 1098 T so just enter the $637 directly via that method. He should get $127.

6

I think the tax software does pretty well. It will ask if you earned money in another state, and it may be a little hard to o calculate all the dates, but I used Turbo Tax a few years ago and lived in two states and it seemed to figure it out correctly.