client did not track whether it was loan or grant money that he used for living expense. Parents did not support him other than when he was home for 3 months in summer. He received $6200 in grants and took over $9000 in loans. I think some of the grant money is taxable but how to determine how much? Prorate?
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Money is fungible
so it doesn't matter that he did not keep track of which source he used to pay for what. My take would be that if he can't prove spending on tuition and fees at least the amount of the grant money then he's got to be taxed on the balance of the grant money over and above the costs of tuition and fees. Remember that the amount on his F 1099T may be more or less than what he actually spent on tuition and required fees. I think he can include textbooks also. Don't forget also to look at education credits if he spent more than the grant money on tuition and fees. -
He had 8800 of tuition and 1700 of books and supplies. I am concerned about the AOC since his W2 is for less than $5000. Thought it might be better to show taxable grant income.Comment
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