Tax question "how to file taxes and get money back from tuition that ROTC paid for"

Discussion in 'ROTC' started by gojack, Feb 13, 2013.

  1. gojack

    gojack ....

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    My DS just texted me that a friend of his is going to show him "how to file taxes and get money back from tuition that ROTC paid for"

    Before I say anything to my "DS" about how stupid that is, what might his friend be talking about? :hammer:

    Thanks
     
  2. EDelahanty

    EDelahanty Member

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    Alchemy? Legerdemain? Your first instinct was correct. The beauty of the statement is in its incoherence.

    On the other hand I recall an early Bob Newhart routine in which he played an accountant. One of his techniques for preparing a tax return was to declare the entire nation of Romania as dependents.
     
  3. goaliedad

    goaliedad Parent

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    Other than the fact that the college will issue a document to both the student and IRS (called a 1098-T) stating how much tuition the institution charged and how much was given in scholarships (the difference between the numbers should be about zero), it should be pretty easy to pull a fast one over on the IRS.

    Of course, when the cadet is dismissed for tax fraud and has to repay the scholarship, perhaps there is a way to take that as a deduction for an "educational expense" (lol). However, that isn't taking a deduction for an education paid for by a ROTC scholarship any more, is it?

    Hopefully, this is one of those times that he will recognize that if it is too good to be true, it probably isn't gonna work out too well.
     
  4. kinnem

    kinnem Moderator

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    Your first inclination is correct. Tell him it's stupid. In the circles I run with this is called "breaking the law" or at the very least "how to invite the IRS to do an audit and lose your career in the military in one easy step". I guess the tax free stipend isn't enough. They need more? Being caught at this is assured, not a probability.
     
  5. homewith4

    homewith4 Member

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    I am not encouraging tax fraud...

    But, if a student owes more in tuition and fees than the scholarship covers....ie $18,000 in scholarship for $25,000 tuition. They COULD be eligible for a tax credit depending on their dependency, filing and income status.

    In the mind of a 20 yr old kid...this is getting money back from the ROTC paid tuition. Technically not accurate, but $ they would not get back if they did not files taxes

    In 2011, my DS with only interest income on a meager bank account did not file taxes. But we ran the numbers two ways...our dependent and not or dependent. In the latter, he would have gotten $ back as a low income student with @$7,000 in qualified expenses. But for our family tax situation taken In a whole, it was best for us to keep him as a dependent.
     
    Last edited: Feb 16, 2013
  6. kinnem

    kinnem Moderator

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    Absolutely. If tuition was paid over and above what the scholarship covered then run the numbers and see if you can get those credits or deductions. I'm dreading losing them next year since the kid's scholarship kicked in Jan. 2013.
     
  7. homewith4

    homewith4 Member

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    We get a big hit for tax year 2012. Fall 2011 tuition was not paid until Jan 2012. So we ended up with 3 semesters paid in 2012 reported on the 1098T. Now he has taxable scholarship income.

    We took advantage of the delayed payment tax year 2011...and didn't realize the impact at the time
     
  8. EDelahanty

    EDelahanty Member

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    What do you mean by "taxable scholarship income"? If the scholarship is in the form of a tuition grant, it is not taxable. Just because it appears on a 1098T does not mean that it is considered income.
     
    Last edited: Feb 16, 2013
  9. goaliedad

    goaliedad Parent

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    Scholarship money received in excess of mandatory tuition and fees is considered taxable income. The IRS does not know that CC is slow on paying the Bursar.

    In fact, I suspect my daughter will be in the same boat in a couple of years, as her fall tuition reimbursements tend to show up in January from year 1. I think for us, a call to the Bursar to see if they can go back and readjust the timing of the credit receipt of the scholarship money and bet 1098's re-done. I didn't take the deduction/credit in year 1, so if I can get this straightened out, will come out as it should. If not, we will be getting professional help.

    I suggest others in the situation do the same with regards to professional help.
     
  10. kinnem

    kinnem Moderator

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    Well I certainly don't claim to be a tax expert, and I don't even play one on TV. But it seems to be if 3 semesters of tuition was paid in that tax year, and 3 semesters of tuition scholarship were received in that same year, then everything breaks even and there is no excess. At least that's homewith4's explanation. I'd be talking to an expert... along with calling the bursar as you suggest to resolve any future issues. But since you speak from experience goaliedad... I would defer to you but double-check. Sort of a trust but verify thingie.
     
  11. paradoxer

    paradoxer Member

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    Don't assume the 1098T reflects reality

    Because of IRS reporting options the 1098T seldom reflects reality because the schools can report either tuition billed or tuition paid. They will seldom change a form because in actuality what's on the form doesn't matter. Each year you will need to "do the math" to see what was actually paid in that calendar year.
     
  12. Ohio2015Parent

    Ohio2015Parent Member

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    I agree with Paradoxer. DD, not ROTC but has academic scholarships and grants, encountered the "mis" reporting on her 1098T last year. I "adjusted" what was reported and have been told to simply keep copies of 1098Ts for both years and printouts of bursar bills/accounts to back up my adjustment.

    Of course, check with your own tax professional to make sure of anything that impacts your tax situation.
     
  13. mitera

    mitera Member

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    There is something to this. Not a CPA, but am a CFP. Check out http://www.irs.gov/uac/Tax-Benefits-for-Education:-Information-Center
    Ask your tax advisor if you qualify based on income thresholds. Even if you borrowed money for school you can claim the education tax credit. Unless your cadet has earned income he/she won't be able to use the credit. It's not refundable.
     

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