Welcome Guest. Register Now!  


Itemized Deductions Schedule-A


Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 02-17-2013, 09:55 PM
Junior Member
 
Join Date: Feb 2013
Posts: 1
How to deduct a one time purchase of a 4 year scholarship?

In 2012, I purchased a 4 year scholarship for my child. The entire amount was paid in 2012, but the scholarship is applied over the next 4 years. Should I deduct the entire amount actually paid in 2012, and none in the next 3 years, or should I claim 1/4 of the amount in each of the next 4 years? Claiming a one time amount that far exceeds one year of tuition doesn't seem right, but claiming a deduction in a year where I didn't actually spend money on it doesn't seem right either...



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 02-18-2013, 05:01 PM
Moderator
 
Join Date: Oct 2010
Posts: 5,233
“In 2012, I purchased a 4 year scholarship for my child. The entire amount was paid in 2012, but the scholarship is applied over the next 4 years. Should I deduct the entire amount actually paid in 2012, and none in the next 3 years, or should I claim 1/4 of the amount in each of the next 4 years?”===========> The federal government, along with most state governments, grant favorable tax treatment to these investments in education; There are tax benefits on earnings, but you may not deduct these contributions on your income taxes. In fact, you may have to pay a gift tax on annual contributions that exceed the set limit. The IRS set the limit at $13K per year as of 2011. The federal government does not impose taxes on any interest earned on investments through prepaid college plans. You must use the money to pay for qualifying college expenses for the named beneficiary. Qualifying expenses include tuition, books, college fees and computer technology designated for educational purposes. Some plans include funding for on-campus room and board as well. The government tax exemptions only apply to withdrawals from a 529 plan that go toward such expenses. States sponsor prepaid college plans and encourage residents to invest in state colleges and universities. Some states make all qualified tuition plan earnings tax exempt, even those from out-of-state plans. Other states only give favorable tax treatment to plans for future students of home-state colleges. Still other states tax the earnings on all prepaid plans. Many states also tax certain transactions, such as rolling funds into a local plan from an out-of-state plan.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Large scholarship given at the end of the year TimmyB1979 Income 0 01-14-2011 12:36 AM
Can a 2009 home purchase be treated as a 2008 purchase to claim Home Owners Credit? TaxGuru Homeowner Tax 0 08-15-2009 12:31 AM
IRS offers New Tax Credit for First Time Home Buyers for Tax Year 2008! TaxGuru For 2008 0 08-08-2008 11:49 AM
Why is 2008 considered a great time to purchase an auto vehicle for business? TaxGuru Auto Expenses 0 07-16-2008 01:20 PM
What closing costs can I deduct from a purchase of a rental property? katlee Rental Real-Estate 1 02-11-2008 04:50 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning