Tax Question

Discussion in 'ROTC' started by mariner116, Feb 20, 2011.

  1. mariner116

    mariner116 Member

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    It is tax time and I have a question on how to handle tuition and other fees (I know I can consult a tax professional but I'm interested in how others handle the tax situation...).

    Let's say total fees (tuition, room and board) from the university are $30,000. ROTC pays $20,000 (amount of tuition). This leaves a cash expense for us of $10,000 (generally the amount for room and board). The ROTC contribution is based on tuition fees, however there is nothing in the way the university handles the ROTC contribution that is linked to tuition, room or board. It drops into my daughter's account (just like her loans and a university provided scholarship). For example, because I had paid the fall tuition, the initial ROTC scholarship funds were used to offset the room and board payable amount.

    Can I claim the balance of $10,000 that I'm paying is for tuition? Getting a tax credit for some portion of this $10,000 in expense would certainly be nice.
     
  2. Ohio2015Parent

    Ohio2015Parent Member

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    Has you college issued a 2010 1098-T? This is pretty much what you have to go by for filing. There have been a few previous threads about ROTC not being taxable, if used for tuition, and not being reportable for FAFSA(plan to ask that question soon directly to FinAid at our school). Also, I would suggest hitting the irs.gov site - this is where I have found best answers in my time (not sitting on hold for a tax rep).

    If you have not received a 1098-T, check and see if your college delivers them electronically - some do and some do both electronically and snail mail.
    The total billed for allowable expenses(tuition and fees) and the amount of scholarship are on the form.

    Hope this helps, I do our taxes myself(with a little help from Turbotax since having to handle the scholarships for my older DD, hers are merit based university funds, DS is currently waiting to hear about AROTC).

    I mentioned on another thread about FAFSA verification - our family was one of the random choosen for 2011-12 school year. Have to hand over copies of everything....I'm so overjoyed:wink:
     
  3. mariner116

    mariner116 Member

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    Thanks Ohio! I found the 1098-T form on my daughter's portal, entered it into TurboTax and finished up that part of the taxes. The ROTC scholarship is tied to tuition so no tax credit for us... But the scholarship is not taxable income.

    Thanks again for the help.
     
  4. paradoxer

    paradoxer Member

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    Variables

    Generally, if you are talking about the Hope tax credit then based on this scenario you would not be paying for tuition since the ROTC amount is for tuition and you are not paying for tuition no matter the order of the payments.

    If the ROTC scholarship was for room and board that would not be allowed under the Hope credit but then you would be dealing with money that can potentially be taxable to the student.

    The course fees and supplies can also be an expense used towards the Hope Credit but you would have to do some math to see if you truly had out of pocket expenses for these.

    You definitely want to look at the 1098-T but they are tricky documents because school billing cycles typically do not match the same yearly IRS tax periods and thus often can not be taken at face value.

    And there are also income limits in order to qualify for the Hope credit as it is phased out for higher incomes.

    You really do want to consult a professional, especially the first time you prepare your taxes. As this is only one scenario and there are many other pieces of aid/tax rules that could come into play depending on the situation.
     
  5. Ohio2015Parent

    Ohio2015Parent Member

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    Love Turbotax, it takes the numbers and picks out what is the best case scenario from all the different options.

    yes, paradoxer, I've heard some schools don't keep their records in full academic year, but rather calendar/tax year so the first year you may not get to claim an entire years tuition for Hope. Luckily, my DD's school keeps academic year so we've always gotten to take the Hope.
     

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