IRS 1098-T Box 1 and American Opportunity Credit

A

agarb

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Short version of my question:

I’m trying to do some planning with respect to upcoming out-of-pocket expenses for my incoming DS and next year’s income taxes. I am especially interested in expenses eligible for the American Opportunity Credit.

I am assuming USMMA issues form 1098-T to each student. Does anybody feel comfortable sharing (in forum or via PM) the amount listed in box 1 “Payments received for qualified tuition and related expenses”? If you care to share, it would also be helpful to know the class year of the receiving midshipman.

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Long version of my question:

IRS Publication 970 outlines the American Opportunity credit. This generally covers tuition and “certain related expenses required for enrollment or attendance.”

Publication 970 continues to define related expenses.
  • Student activity fees are included only if payable directly to the institution as a condition of enrollment.
  • Books, supplies, and equipment needed for course of study are included whether or not purchased from the institution.
Publication 970 also lists some expenses that don’t qualify, such as insurance, medical, room/board, transportation, or personal expenses.

Based on numbers found in the 2023 Logging In, it appears that our out-of-pocket expense through this calendar year will be approximately $4400. (Excluding travel and miscellaneous expenses.)
  • Midshipman Fees ($1050)
  • Educational Kit ($161 Deck or $116 Engine)
  • Computer Package ($2190)
  • Optional Accessory Package ($410)
  • Plebe Kit – Personal Items ($628)
I have my opinion on which of the above out-of-pocket expenses are qualified for the tax credit and which ones are not. Assuming USMMA issues 1098-T, it would be helpful to know approximately what amounts they actually include in box one as being a “qualified” educational expense.





 
Expenses that are included in box one aren’t necessarily the only qualified expenses. Colleges generally include tuition and fees. Books usually are not included.
 
Try google. This has come up before here on SAF.


Cadet Taxes - Form 8880

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www.serviceacademyforums.com
 
Sorry about above post - I thought I had found the post I remembered, but somehow copied the link for that one.

Here’s a brief mention at USMMA.edu:

Fees and Expenses | U.S. Merchant Marine Academy

The Federal Government pays the majority of the costs associated with enrollment at USMMA. Midshipmen receive tuition, room and board, uniforms, and textbooks at no cost.
www.usmma.edu

Google this search string:
service academy and form 1098 T

Several entries, including the USMA tax info letter which directly addresses the service academy 1098 issue.

 
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Capt MJ - Thanks for the links.

I have my own opinions and definitely will consult with a tax professional.

I do wonder, however, if letter from the US Military Academy really applies to US Merchant Marine Academy.

First, KP doesn't pay their students a monthly salary or stipend like the Military Academy does.

Finally, paragraph 5 of the letter you linked says, "USMA does not accept any federal financial aid and is ineligible to participate in a student aid program under the Department of Education. Rather, USMA and the other military academies fall under the Department of Defense and are not within the IRS’ definition of eligible educational institution." However, King's Point does accept federal financial aid and has a school code (002892). I could not find a school code for CGA, USAF, USMA, or the USNA.

For those who care, this is the link from which I downloaded a searchable excel file of all the federal school codes.

Also, this page states, " USMMA participates in the Federal Student Aid (FSA) programs for Pell Grants, Direct Subsidized Loans, and Direct Unsubsidized Loans. Financial aid is available for all qualified Midshipmen, regardless of income level, and may be used to offset the costs outlined above." The same page also states, "Students interested in receiving Federal Financial Aid should file a Free Application for Federal Student Aid (FAFSA). "
 
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