.
Students and Taxation –
Education Credits
September 17, 2014
IRS Program Number
QSRNU-T-00124-14-I
Presenter:
Charles R. Spencer, EA
101
Presentation Title: Students and Taxation – Education Credits
Presentation Description: This program will discuss - Education Credits;
American Opportunity and Lifetime Learning. Publication 970 will be used as a
guide.
Speaker Bio: Charles Spencer, EA will be the program leader/speaker on this
topic. Mr. Spencer has been an EA since 1995 and owns and operates
Accounting and Tax Center, Inc. in Roanoke, Virginia. Charles R. Spencer, EA,
is President of Accounting and Tax Center, Inc. in Roanoke, VA and is an
Enrolled Agent. Charles has an A.S. in Accounting and Management from
National Business College (1968) and a B.S. in Accounting and Management
from Lynchburg College (1974). He was an auditor/manager with a large
financial institution for 17 years before starting Accounting and Tax Center,
Inc. in December, 1993. He has successfully completed the National
Association of Enrolled Agents Education Foundation's program in
Representation and Practice before the Internal Revenue Service. Those
successfully completing the program are entitled to use the designation of
"Fellow of the National Tax Practice Institute." Charles frequently provides
training to members of the Blue Ridge Chapter of the Virginia Society of
Enrolled Agents. He is a member of The National Association of Enrolled
Agents, The Virginia Society of Enrolled Agents, The Blue Ridge Chapter of the
Virginia Society of Enrolled Agents and The National Association of Tax
Professionals.
Number of CE Hours: One (1)
Location of Program: Roanoke, Virginia
102
Disclaimer: This seminar is presented with the understanding
that the program leader/speaker is not rendering legal,
accounting, IRS, or other professional advice or opinions on
specific facts or matters, and, accordingly, assumes no liability
whatsoever in connection with its use or with future rulings or
law changes that may affect the material presented. The
information provided is for educational purposes only and
nothing herein constitutes the provision of legal advice or
services. This seminar was not written or intended to be used,
and cannot be used, for the purpose of avoiding any tax related
penalties that may be imposed on you or any other person
under the Internal Revenue Code.
103
Second Disclaimer:
I DON’T KNOW.
You may have to do some research!
also
Our discussion today will assume doing
a 2013 tax return.
104
To get credit:
Fill out and turn in your EVALUATION.
Pick up your CE CERTIFICATE.
Make sure you signed the sign in sheet AND
included your PTIN.
Retain a copy of the program materials.
Pay any required Non-Member fees:
$ 5 to BRC
$15 to VASEA within 2 days
105
On July 16, 2014 we discussed:
Scholarships and Fellowships
Other Types of Educational Assistance
Student Loan Interest Deduction
Tuition and Fees Deduction
106
Today September 17, 2014:
Credits:
American Opportunity (AO)
Lifetime Learning (LL)
107
Outline
Introduction
Requirements for CE
Today’s Topic
History Lesson
AO Chart
LL Chart
MAGI
Warning
Tuition and Fees Deduction
AO and LL
Gift?
MFS
Qualified Expenses
Chart
Adjustments
Scholarship
More than one credit?
How Reported?
Can you claim?
IRS Web Site
Pub 970 – Flow Chart
1098-T
Box 1
Box 2
Box 5
Recap Chart
Test
Problems:
Doe2A
Doe3
The Take Aways
Questions
Speakers PowerPoint at
www.brcea.org/sept17
108
History Lesson: Congress enacted and President
Clinton signed into law the Taxpayer Relief Act of
1997 on August 5, 1997. This amendment to the
Internal Revenue Service (IRS) tax code for tax
year 1998 created, among other things, the federal
Hope Scholarship and Lifetime Learning Tax
Credits. These credits were originally worth up to
$1,500/$1,000 per year.
In 2009 the Hope Scholarship was renamed the
American Opportunity Tax Credit.
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Today (2013):
American Opportunity Credit – up to $2,500 per
student for up to 4 years
100% - First $2,000
25% - Next $2,000
Lifetime Learning Credit – up to $2,000 MAX
20% - First $10,000
The American opportunity credit will always be greater than or
equal to the lifetime learning credit for any student who is
eligible for both credits.
110
American Opportunity Credit (2009)
Maximum credit
Up to $2,500 credit per eligible student
2,000 – 100%; next 2,000 – 25%
Limit on modified adjusted gross
income (MAGI)
$180,000 if married filing jointly; $90,000 if single, head of
household, or qualifying widow(er)
Refundable or nonrefundable
40% of credit may be refundable; the rest is nonrefundable
Number of years of
postsecondary education
Available ONLY if the student had not completed the first 4 years
of postsecondary education before 2013
Number of tax years credit
available
Available ONLY for 4 tax years per eligible student (including
any year(s) Hope Scholarship Credit was claimed (1998-2008)
Type of program required
Student must be pursuing a program leading to a degree or
other recognized education credential
Number of courses
Student must be enrolled at least half time for at least one
academic period that begins during the tax year
Felony drug conviction
As of the end of 2013, the student had not been convicted of a
felony for possessing or distributing a controlled substance
Qualified expenses
Tuition, required enrollment fees, and course materials that the
student needs for a course of study whether or not the materials
are bought at the educational institution as a condition of
enrollment or attendance
Payments for academic periods
Payments made in 2013 for academic periods beginning in 2013
111
or beginning in the first 3 months of 2014
Lifetime Learning Credit
Maximum credit
Up to $2,000 credit per taxpayer - MAX per return
First 10,000 – 20%
Limit on modified adjusted gross
income (MAGI)
$127,000 if married filling jointly;
$63,000 if single, head of household, or qualifying widow(er)
Refundable or nonrefundable
Nonrefundable—credit limited to the amount of tax you must pay
on your taxable income
Number of years of
postsecondary education
Available for all years of postsecondary education and for
courses to acquire or improve job skills
Number of tax years credit
available
Available for an unlimited number of years
Type of program required
Student does not need to be pursuing a program leading to a
degree or other recognized education credential
Number of courses
Available for one or more courses
Felony drug conviction
Felony drug convictions do not make the student ineligible
Qualified expenses
Tuition and fees required for enrollment or attendance (including
amounts required to be paid to the institution for courserelated books, supplies, and equipment)
Payments for academic periods
Payments made in 2013 for academic periods beginning in 2013
or beginning in the first 3 months of 2014
112
What is "modified adjusted gross income" (MAGI)?
MAGI, modified adjusted gross income, for most people is the amount of
AGI, adjusted gross income, shown on your tax return. On Form 1040A, AGI
is on line 22 and is the same as MAGI. If you file Form 1040, AGI is on line 38
and you add back the following:
•
Foreign earned income exclusion,
•
Foreign housing exclusion,
•
Foreign housing deduction,
•
Exclusion of income by bona fide residents of American Samoa, and
•
Exclusion of income by bona fide residents of Puerto Rico.
To compute MAGI for the Tuition and Fees deduction, you compute the MAGI
before putting any amounts on Form 1040A line 19 (tuition and fees) or Form
1040, line 34 (tuition and fees) or line 35 (domestic production activities
deduction).
If you need to adjust your AGI to find your MAGI, there are worksheets in the
Publication 970 to help you.
113
A word of WARNING – Be sure to
review the rules for every type of
Education Benefit you are
claiming.
There are different rules and
requirements for each type.
114
For instance; remember this for the Tuition and Fees Deduction:
Who Can claim Tuition and Fees Deduction for a Dependent's Expenses
Generally, in order to claim the tuition and fees deduction for qualified
education expenses for a dependent,
you must:
• Have paid the expenses, and
• Claim an exemption for the student as a dependent.
Expenses paid by dependent. If your dependent pays qualified
education expenses, no one can take a tuition and fees deduction for those
expenses. Neither you nor your dependent can deduct the expenses. For
purposes of the tuition and fees deduction, you are not treated as paying
any expenses actually paid by a dependent for whom you or anyone
other than the dependent can claim an exemption. This rule applies even if
you do not claim an exemption for your dependent on your tax return.
115
Now for both the American Opportunity and Lifetime Learning Credit –
Qualifying Expenses paid by
Student = paid by student/parent
Parent = paid by parent/student
Grandparent if paid directly to an eligible institution = student/parent
Any 3rd Party if paid directly to an eligible institution = student/parent
IF paid directly to an eligible institution; the student is treated as
receiving the funds from the third party and then paying the
institution.
Added Bonus – Not considered a Gift for Gift Tax purposes.
116
26 U.S. Code § 2503 - Taxable gifts
(e) Exclusion for certain transfers for educational expenses or
medical expenses
(1)
In general
Any qualified transfer shall not be treated as a transfer of
property by gift for purposes of this chapter.
(2) Qualified transfer
For purposes of this subsection, the term “qualified
transfer” means any amount paid on behalf of an individual—
(A) as tuition to an educational organization described in
section 170 (b)(1)(A)(ii) for the education or training of such
individual, or
(B) to any person who provides medical care (as defined
in section 213 (d)) with respect to such individual as payment for
such medical care.
-----------------------------------------------------------------------------------------------Have you ever considered Gifts to Adult Child and the Gift Tax Return?
117
26 U.S. Code § 2503 - Taxable gifts
(c) Transfer for the benefit of minor
No part of a gift to an individual who has not attained the age of 21
years on the date of such transfer shall be considered a gift of a
future interest in property for purposes of subsection (b) if the
property and the income therefrom—
(1) may be expended by, or for the benefit of, the donee before
his attaining the age of 21 years, and
(2) will to the extent not so expended—
(A) pass to the donee on his attaining the age of 21
years, and
(B) in the event the donee dies before attaining the age of
21 years, be payable to the estate of the donee or as he
may appoint under a general power of appointment as
defined in section 2514 (c).
118
Remember:
Lost Education Benefits of filing Married
Filing Separately (MFS) –
Education Credits
Student loan interest deduction
Tuition and fees deduction
Savings bond interest exclusion
119
Qualified expenses:
Tuition and Fees Deduction: Tuition and fees required for enrollment or
attendance at an eligible postsecondary educational institution, but not including
personal, living, or family expenses, such as room and board.
Eligible Educational Institution: www.ope.ed.gov/accreditation/
American Opportunity: Tuition, required enrollment fees, and course materials
that the student needs for a course of study whether or not the materials are
bought at the educational institution as a condition of enrollment or attendance
Lifetime Learning: Tuition and fees required for enrollment or attendance
(including amounts required to be paid to the institution for course-related books,
supplies, and equipment)
Remember: Review the rules; you might figure tuition for AO but it might be
different for LL.
Student withdraws from class(es). You can claim an education credit for
qualified education expenses not refunded when a student withdraws.
120
American Opportunity
Lifetime Learning
YES
YES (also includes
courses taken to
acquire or improve job
skills)
Course-related books,
supplies and
equipment
YES (must be required
for enrollment or
attendance at the
eligible educational
institution)
YES (must be paid to
the eligible educational
institution as a
condition of enrollment
or attendance)
Nonacademic fees,
such as student
activity fees and
athletic fees
YES (must be paid to
the eligible educational
institution as a
condition of enrollment
or attendance)
YES (must be paid to
the eligible educational
institution as a
condition of enrollment
or attendance)
NO
NO
Tuition and fees
Room and board
121
Re-Cap: For course-related books, supplies, and
equipment, only certain expenses qualify.
American opportunity credit: Qualified education
expenses include amounts spent on books,
supplies, and equipment needed/required for a
course of study, whether or not the materials are
purchased from the educational institution as a
condition of enrollment or attendance.
Lifetime learning credit: Qualified education
expenses include amounts for books, supplies, and
equipment only if required to be paid to the
institution as a condition of enrollment or
attendance.
122
Qualified education expenses include nonacademic fees, such as
student activity fees, athletic fees, or other expenses unrelated to the
academic course of instruction, only if the fee must be paid to the
institution as a condition of enrollment or attendance. However, fees for
personal expenses are never qualified education expenses.
Qualified education expenses for either credit do not include amounts
paid for:
•
Personal expenses. This means room and board, insurance, medical
expenses (including student health fees), transportation, and other
similar personal, living, or family expenses.
•
Any course or other education involving sports, games, or hobbies, or
any noncredit course, unless such course or other education is part of
the student's degree program or (for the lifetime learning credit only)
helps the student acquire or improve job skills.
•
Bundled Fees – (qualified and personal) Must be allocated by the
institution.
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Adjustments to Qualified Education Expenses
For each student, reduce the qualified education expenses paid in 2013 by
or on behalf of that student under the following rules. The result is the
amount of adjusted qualified education expenses for each student.
Tax-free educational assistance. For tax-free educational assistance
received in 2013, reduce the qualified educational expenses for each
academic period by the amount of tax-free educational assistance
allocable to that academic period. Tax-free educational assistance
includes:
– Tax-free parts of scholarships and fellowships,
– The tax-free part of Pell grants, (tax-free being for Qualified Expenses)
– The tax-free part of employer-provided educational assistance,
– Veterans' educational assistance, and
– Any other nontaxable (tax-free) payments (other than gifts or
inheritances) received as educational assistance.
124
Generally, any scholarship or fellowship is treated as tax-free
educational assistance. However, a scholarship or fellowship is
not treated as tax-free educational assistance to the extent the
student includes it in gross income (if the student is required to
file a tax return) for the year the scholarship or fellowship is
received and either:
• The scholarship or fellowship (or any part of it) must be applied
(by its terms) to expenses (such as room and board) other than
qualified education expenses; or
• The scholarship or fellowship (or any part of it) may be applied
(by its terms) to expenses (such as room and board) other than
qualified education expenses.
Please refer to Pub 970 or the July 16, 2014 program.
125
We talked about Refunds and Credit
Recapture two months ago (July 16,
2014, so I won’t repeat it here but if you
need to know about those, please refer
to Pub 970.
126
Can you claim more than one education credit this year. For each
student, you can elect for any year only one of the credits. For example, if
you elect to take the American opportunity credit for a child on your 2013
tax return, you cannot use that same child's qualified education expenses to
figure the lifetime learning credit for 2013.
If you pay qualified education expenses for more than one student in the
same year, you can choose to take the American opportunity credit on a
per-student, per-year basis. If you pay qualified education expenses for a
student (or students) for whom you do not claim the American opportunity
credit, you can use the adjusted qualified education expenses of that
student (or those students) in figuring your lifetime learning credit. This
means that, for example, you can claim the American opportunity credit for
one student and the lifetime learning credit for another student in the same
year.
•
Differences between the American opportunity and lifetime learning
credits. There are several differences between these two credits. For
example, you can claim the American opportunity credit based on the same
student's expenses for no more than 4 tax years, which includes any tax
years you claimed the Hope Scholarship Credit for that student.
127
Form 8863 - Education Credits (American Opportunity
and Lifetime Learning Credits)
Where are Education Credits Reported?
128
Can you claim an Education Credit?
http://www.irs.gov/uac/Am-I-Eligible-to-Claim-an-Education-Credit%3F
(Yep, the ending is %3F)
Pub 970 – Flow Chart
129
http://www.irs.gov/uac/Am-I-Eligible-to-Claim-an-Education-Credit%3F
130
131
132
133
Get the Student’s Account Statement
Don’t depend solely on the 1098-T.
Statement shows:
Charges (qualified/non-qualified)
Payments (scholarships, loans, payments)
When PAID?
134
Box 1. Payments Received for Qualified Tuition and Related Expenses
If you use this method of reporting, enter the total amount of payments
received for qualified tuition and related expenses from all sources
during the calendar year. The amount reported is the total amount of
payments received less any reimbursements or refunds made during the
calendar year that relate to the payments received for qualified tuition
and related expenses during the same calendar year. The amount
reported is not reduced by scholarships and grants reported in box 5.
Box 2. Amounts Billed for Qualified Tuition and Related Expenses
If you use this method of reporting, enter the amounts billed during the
calendar year for qualified tuition and related expenses. The amount
reported is the total amount billed less any reductions in charges made
during the calendar year that relate to the amounts billed for qualified
tuition and related expenses during the same calendar year. The amount
reported is not reduced by scholarships and grants reported in box 5.
135
Box 5. Scholarships or Grants
Enter the total amount of any scholarships or grants that you
administered and processed during the calendar year for the payment
of the student's costs of attendance. Scholarships and grants
generally include all payments received from 3rd parties (excluding
family members and loan proceeds). This includes payments received
from governmental and private entities such as the Department of
Veterans Affairs, the Department of Defense, civic, and religious
organizations, and nonprofit entities.
136
Next Slides – Comparisons –
Information Only.
137
138
139
140
Next The Test
141
Are any of these Qualified tuition and related expenses?
• Expenses related to any course of instruction or education involving
sports, games or hobbies, or to any noncredit course (unless the
course is part of the student's degree program or, in the case of the
Lifetime Learning Credit, the student takes the course to improve job
skills),
• Student activity fees (unless required for enrollment or attendance),
• Athletic fees (unless required for enrollment or attendance),
• Costs of room and board,
• Insurance premiums or medical expenses (including student health
fees),
• Transportation expenses, and
• Other personal, living or family expenses.
142
Are any of these Qualified tuition and related expenses?
• Expenses related to any course of instruction or education involving
sports, games or hobbies, or to any noncredit course (unless the
course is part of the student's degree program or, in the case of the
Lifetime Learning Credit, the student takes the course to improve job
skills),
• Student activity fees (unless required for enrollment or attendance),
• Athletic fees (unless required for enrollment or attendance),
• Costs of room and board,
• Insurance premiums or medical expenses (including student health
fees),
• Transportation expenses, and
• Other personal, living or family expenses.
NO!
143
Do tuition and related expenses paid to attend a
private high school qualify for an education credit?
144
Do tuition and related expenses paid to attend a
private high school qualify for an education credit?
No! Expenses paid to attend a private high school do
not qualify for an education credit because a high school
is not an eligible educational institution.
In general, an eligible educational institution is an
accredited college, university, vocational school, or other
postsecondary educational institution. In addition, in
order to be an eligible educational institution, the school
must be eligible to participate in a student aid program
administered by the Department of Education.
145
Can I claim an education credit for
higher education expenses paid by a
government-subsidized loan?
146
Can I claim an education credit for
higher education expenses paid by a
government-subsidized loan?
Higher education expenses paid with the
proceeds of a government-subsidized
loan may qualify for the credit if you must
repay the loan. The credit is claimed in the
year in which the expenses are paid, not in
the year in which the loan is repaid.
147
Is an education credit available for the cost of a high
school student taking college classes before
graduation from high school?
148
Is an education credit available for the cost of a high
school student taking college classes before
graduation from high school?
The fact that a student has not graduated from high
school does not necessarily disqualify the student
from claiming a credit. For purposes of the American
opportunity credit, a student must be enrolled at least
half-time in a postsecondary education program leading
to a degree, certificate or other recognized educational
credential for at least one academic period at an eligible
educational institution. For purposes of the lifetime
learning credit, a credit can be taken for any qualified
educational expenses paid for a student who is enrolled
in one or more courses at an eligible educational
institution to acquire or improve job skills.
149
Does a computer qualify for the AOTC?
150
Does a computer qualify for the AOTC?
It depends. The amount paid for the
computer can qualify for the credit if you
need the computer for attendance at the
educational institution.
151
If a student was an undergraduate student
during the first part of the tax year and
became a graduate student that same year,
can the student qualify for the AOTC?
152
If a student was an undergraduate student
during the first part of the tax year and
became a graduate student that same year,
can the student qualify for the AOTC?
Yes, the student can claim the AOTC for
qualified educational expenses paid during
the entire tax year, if the student:
1. Has not completed the first four years of postsecondary (college) education as of the
beginning of the tax year, and
2. Has not claimed the Hope scholarship credit
and/or the AOTC for more than four years.
153
Can students with an F-1 Visa claim the
AOTC?
154
Can students with an F-1 Visa claim the
AOTC?
For most students present in the U.S. on an F-1
Student Visa, the answer is no. Generally
speaking, the time spent by an alien individual
studying in the U.S. on an F-1 Student Visa is
not counted to determine whether he or she is a
resident alien under the substantial presence
test. But, if your parent or parents claim you as a
dependent on their tax return, your parent may
qualify for the credit. See Publication 519, U.S.
Tax Guide for Aliens for more information.
155
Next Problem
Doe2A
156
Problem – Doe2A
Please do a 2013 tax return for both John and Jane Doe2A
(MFJ) AND Student Doe2A (S)
The Doe2A’s wish to minimize their total combined taxes.
Taxpayers:
John and Jane Doe2A (DOB 1/1/70)
| Student Doe2A
1 Main Street
Roanoke, VA 24040 (Roanoke Co.)
| Same Address
Dependents:
Student Doe2A Son 123-12-1232 Born: 01/01/1993 (20)
During 2013 John Doe2A paid the following:
1) Qualified Education Expenses:
$12,000
2) Over one-half of Student’s Support.
157
Problem – Doe2A
John’s W-2 123-12-1234
Occupation: Worker
A Company
999 Main Street
Roanoke, VA 24019
EIN 54-1234567
Box 1, 3, 5 $100,000
Box 2
$18,400
Box 4
$6,200
Box 6
$1,450
Box 15 VA 30-541234567
Box 16
$100,000
Box 17
$5,300
Jane’s W-2 123-12-1233
Occupation: Worker
A Company
999 Main Street
Roanoke, VA 24019
EIN 54-1234567
Box 1, 3, 5
$100,000
Box 2
$18,400
Box 4
$6,200
Box 6
$1,450
Box 15 VA 30-541234567
Box 16
$100,000
Box 17
$5,300
158
Problem – Doe2A
Student’s W-2 123-12-1232
Occupation: Worker
A Company
999 Main Street
Roanoke, VA 24040
EIN 54-1234567
Box 1, 3, 5
$22,400
Box 2
$
Box 4
$1,389
Box 6
$325
Box 15
VA 30-541234567
Box 16
$22,400
Box 17
$850
Student’s 1098-T
Roanoke School
1000 Main Street
Roanoke, VA 24019
EIN 54-1234566
Service Provider Number: 0436811
Box 1
$12,000
Box 8
X
Student Doe2A is in his 3rd year at Roanoke School and is a full-time student. John
and Jane Doe2A previously claimed in 2011 and 2012 the American Opportunity Tax
Credit for Student.
HINT: No, the correct answer will not come out to ZERO.
159
Problem – Doe2A
160
Problem – Doe2A
161
Problem – Doe2A
37-200,000
61-37,866
76-1,066
162
Problem – Doe2A
163
Problem – Doe2A
164
Problem – Doe2A
37-22,400
43-16,300
54-2,003
165
Problem – Doe2A
1-2,500
8- -0- Refundable
9-2,500
10-2,003
2-2,500
3-2,500
4-2,003
6-2,003
7-2,003 Non-Refundable
166
Problem:
Student can claim AO or LL on his/her return even if he/she is
a dependent of a parent. The parent just doesn’t claim the
dependency exemption and then the student files and doesn’t
claim the personal exemption, (i.e., no one is claiming the
exemption.
This is good to remember if the parent is in/over the phase out
limit. But neither gets the exemption in this case.
Not eligible for the Refundable portion.
Remember that the American Opportunity
Credit can be refundable on the parent's
return, but not on the student's if he's under
24.
Planning Tip: Parents might want to make payments to keep
options open – Tuition deduction/AO/LL.
167
Refundable Part of Credit - Forty percent of the American opportunity
credit is refundable for most taxpayers. However, if you were under
age 24 at the end of 2013 and the conditions listed below apply to
you, you cannot claim any part of the American opportunity credit as
a refundable credit on your tax return. Instead, your allowed credit
(figured on Form 8863, Part II) will be used to reduce your tax as a
nonrefundable credit only.
You do not qualify for a refund if items 1 (a, b, or c), 2, and 3 below
apply to you.
1.
You were:
a. Under age 18 at the end of 2013, or
b. Age 18 at the end of 2013 and your earned income (defined
below) was less than one-half of your support (defined below), or
c. Over age 18 and under age 24 at the end of 2013 and a full-time
student (defined below) and your earned income was less than
one-half of your support.
2. At least one of your parents was alive at the end of 2013.
3. You are filing a return as single, head of household, qualifying
widow(er), or married filing separately for 2013
168
Next Problem
Doe3
169
Problem – Doe3
Please do a 2013 tax return for both John and Jane Doe3 (MFJ)
AND Student Doe3 (S)
The Doe3’s wish to minimize their total combined taxes.
Taxpayers: John (DOB 1/1/69) and Jane Doe3 (DOB 1/1/70) | Student Doe3
1 Main Street
| Same Address
Roanoke, VA 24040 (Roanoke Co.)
Dependents:
Student Doe3 Son 123-52-1232 Born: 01/01/1993 (20)
During 2013 the John Doe3 paid the following:
1) Qualified Education Expenses:
$12,000 correction 2,000
2) Over one-half of Student’s Support.
170
Problem – Doe3
John’s W-2 123-52-1234
Occupation: Worker
A Company
999 Main Street
Roanoke, VA 24019
EIN 54-1234567
Box 1, 3, 5 $50,000
Box 2
$4,200
Box 4
$3,100
Box 6
$725
Box 15 VA 30-541234567
Box 16
$50,000
Box 17
$2,400
Jane’s W-2 123-52-1233
Occupation: Worker
A Company
999 Main Street
Roanoke, VA 24019
EIN 54-1234567
Box 1, 3, 5
$50,000
Box 2
$4,200
Box 4
$3,100
Box 6
$725
Box 15 VA 30-541234567
Box 16
$50,000
Box 17
$2,400
HINT: No, the correct answer will not come out to ZERO.
171
Problem – Doe3
Roanoke School
Account Statement a/o December 31, 2013
Student Doe3
Date
Description
Charge
8/1/2013 Tuition
15,500.00
8/1/2013 Activity Fee
200.00
8/1/2013 Telecommunications Fee
600.00
8/1/2013 Parking Fee
200.00
8/1/2013 Board – Meal Plan
2,800.00
8/1/2013 Health Insurance
400.00
8/1/2013 Room Charge
3,600.00
8/1/2013 Roanoke School Scholarship
(Qualified Expenses only)
8/15/2013 Virginia Tuition Assistance
Grant (Tuition only)
8/17/2013 Company A – Scholarship
(any expense)
8/20/2013 Unsubsidized Federal Stafford Loan
8/20/2013 Payment on Account – John Check
Pmt
Balance
15,500.00
15,700.00
16,300.00
16,500.00
19,300.00
19,700.00
23,300.00
8,000.00
15,300.00
1,300.00
14,000.00
2,000.00
10,000.00
2,000.00
12,000.00
2,000.00
-
172
Problem – Doe3
Student’s 1098-T
Roanoke School
1000 Main Street
Roanoke, VA 24019
EIN 54-1234566
Service Provider Number: 0436811
Box 1
$ 15,700
Box 5
$ 9,300
Box 8
X
Student Doe3 is in his 3rd year at Roanoke School and is a full-time student. John and Jane Doe3 previously
claimed in 2011 and 2012 the American Opportunity Tax Credit for Student.
Student’s W-2
A Company
999 Main Street
Roanoke, VA 24040
EIN 54-1234567
Box 1, 3, 5
Box 2
Box 4
Box 6
Box 15
Box 16
Box 17
$22,400
$
$1,389
$325
VA 30-541234567
$22,400
$850
173
Problem – Doe3
174
Problem – Doe3
175
Problem – Doe3
37-100,000
43-76,100
46-10,889
54-1,500 Non-Refundable
61-9,389
62-8,400
66-1,000 Refundable
72-9,400
73-11
176
Problem – Doe3
8-1,000 Refundable
19-1,500 Non-Refundable
177
Problem – Doe3
178
Problem – Doe3
179
Problem – Doec3
180
Pass out Answer Key
181
182
The Take Aways:
Review the rules.
Qualified Expenses paid by Student,
Parent, Relative, 3rd party can all qualify.
Student can claim AO or LL on his/her
return even if he/she is a dependent of a
parent; neither the parent or student takes
an exemption (dependency/personal).
183
Questions?
184
Benny has a Question.
185
To get credit:
Fill out and turn in your EVALUATION.
Pick up your CE CERTIFICATE.
Make sure you signed the sign in sheet AND
included your PTIN.
Retain a copy of the program materials.
Pay any required Non-Member fees:
$ 5 to BRC
$15 to VASEA within 2 days
186
Thank You.
The End!
187
NOTES
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188