1098T Tuition Statement

[Chief]

My mind is boggled and full of something else than taxes.

I have a Form 1098T Tuition Statement issued by Univ of Fl. The student has just completed his first year of college. Box 1 payments reeived for qualified tuition and related expenses if $1087. and box 4. Scholarships or ghrants $1539. Do I need to consider which educ credit is most beneficial to my client and use that one? Tuition or Hope ?? What do you think? Neither of these is considered income, right?

The student is a dependent on his parents' return. Can they claim the credit? or Should he take the credit on his return of modest income?

[Possi]

Exemption wins this prize

The parents will get the education credit as long as they claim the exemption.
Scholarships are only taxable if it was not ALL spent on school. Then only the unused portion is taxable. That will most likely not happen with prices the way they are.
I run my tax credits as an adjustment first, document the change in tax, then run it on the 8863. Whichever is the best advantage is what I take.
Remember the Hope is only good for the first 2 years.
I had a student in the first 2 yrs of college, but the money spent was so large that it actually was better to take the Lifetime credit. That has only happened once for me.
~possi

[Brian EA]

The parents claim the deduction and therefore claim the credit

In most instances the hope would be better than the adjustment. In the case of the adjustment the only break you get is based on your tax rate. As for the Hope you get 100% for the first $1000 and 50% for the 2nd $1000. If you live in the hurricane affected States you get more.

The only time I have used the adjustment is when there is income limitation. Of course I check all three ways to determine the best.
Let us say their income falls within limitations . Their adj is $4000 @ 25% = $1000
Hope = 2000 and lifetime = 800.
If the life time exceeds $7500 it would be better to take it.

[Gretel]

Wait a minute. Just looking at the numbers on that from scholarships were higher than tuition. If scholarships mandated to be used for tuition only, no credit applies.

Besides, I always would try to get a detailed statement from school.

[Brian EA]

Wait a minute. Just looking at the numbers on that from scholarships were higher than tuition. If scholarships mandated to be used for tuition only, no credit applies.

Besides, I always would try to get a detailed statement from school.

Great idea Gabe. Some schools provide detailed statements.

[geekgirldany]

The $1539 was probably for books and tution paid by the Scholorship. The other was just tuition for the college. I'm sure there is no credit or gain.

[Gretel]

Great idea Gabe.

Brian, I really like my name: Gabriele, and noticed that you shortened it the second time. Please don't It's kind of easy with your name.

[Brian EA]

Brian, I really like my name: Gabriele, and noticed that you shortened it the second time. Please don't It's kind of easy with your name.

Thanks for pointing that out. I will never let it happen again

I am sorry

[Matt Sova]

You better not

Or else Gabe will kick your butt. Just kidding Gabriele, don't whoop on me!!!

[Brian EA]

Or else Gabe will kick your butt. Just kidding Gabriele, don't whoop on me!!!

Thanks Pal