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Old 02-11-2014, 11:20 PM
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are payments made to my daughters college from an educational trust considered "scholarships"

My uncle set up an education trust to pay for the college expenses of his nephews and nieces, of which my daughter is one. When my daughter gets her bursar statement, we send it to my uncle and he sends money from the trust directly to the university.

2 questions:
For some reason the university is designating these payments as a “scholarship” on the 1098-T form I received this year. If I understand IRS regs correctly, I have to claim part of the amount they are paying as income (the room and board part). Is this really a scholarship?

If I can get the university to change the 1098-T and show a -0- in the scholarship box 5, can I take the American Opportunity Credit?



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Old 02-12-2014, 10:13 PM
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Quote:
Originally Posted by taxboy9317 View Post
My uncle set up an education trust to pay for the college expenses of his nephews and nieces, of which my daughter is one. When my daughter gets her bursar statement, we send it to my uncle and he sends money from the trust directly to the university.

2 questions:
For some reason the university is designating these payments as a “scholarship” on the 1098-T form I received this year. If I understand IRS regs correctly, I have to claim part of the amount they are paying as income (the room and board part). Is this really a scholarship?

If I can get the university to change the 1098-T and show a -0- in the scholarship box 5, can I take the American Opportunity Credit?
#1;no;aslongas the uncle contributor passes the $14K for 2013 limit(he needs to file form 709 with the IRS), he may owe gift taxes if she also passes her $5.45M for 2013 total lifetime gift-giving limit. You can’t claim Room and board as they are not eligible for the AOC Credit.

#2; 1098-T itself is the info return that colleges /universities are required to issue for the purpose of determining a student's eligibility for the AOC and Lifetime Learning education tax credits.So, if there are qualified education expenses for your dependent during a tax year, either you or your dependent, but not both of you, can claim an AOC credit for your dependent's expenses for that year. For you to claim an AOC credit for your dependent's expenses, you must also claim an exemption for your dependent

AOC can be claimed for expenses for the first four years of post-secondary education;youcan’t claim AOC on Room and board exp.you can’t claim an AOC in the same year that you are claiming a tuition and fees deduction for the same student; can’t claim an AOC for any student and use any of that student's expenses in figuring your lifetime learning credit.



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