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Students and Taxation –

Education Credits

September 17, 2014

IRS Program Number

QSRNU-T-00124-14-I

Presenter:

Charles R. Spencer, EA

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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

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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.

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Second Disclaimer:

I DON’T KNOW.

You may have to do some research!also

Our discussion today will assume doing a 2013 tax return.

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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

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Scholarships and Fellowships Other Types of Educational Assistance Student Loan Interest Deduction Tuition and Fees Deduction

On July 16, 2014 we discussed:

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Credits:

American Opportunity (AO) Lifetime Learning (LL)

Today September 17, 2014:

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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

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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.

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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 or beginning in the first 3 months of 2014

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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 course-related 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

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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.

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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.

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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.

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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.

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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?

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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).

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Remember:Lost Education Benefits of filing Married Filing Separately (MFS) –

Education CreditsStudent loan interest deductionTuition and fees deductionSavings bond interest exclusion

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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.

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American Opportunity Lifetime Learning

Tuition and fees 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)

Room and board NO NO

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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.

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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.

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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.

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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.

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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.

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Form 8863 - Education Credits (American Opportunity and Lifetime Learning Credits)

Where are Education Credits Reported?

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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

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http://www.irs.gov/uac/Am-I-Eligible-to-Claim-an-Education-Credit%3F

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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?

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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.

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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.

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Next Slides – Comparisons – Information Only.

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Next The Test

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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. 

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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!

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Do tuition and related expenses paid to attend a private high school qualify for an education credit?

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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.

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Can I claim an education credit for higher education expenses paid by a government-subsidized loan?

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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.

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Is an education credit available for the cost of a high school student taking college classes before graduation from high school?

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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.

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Does a computer qualify for the AOTC?

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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.

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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?

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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 post-secondary (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.

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Can students with an F-1 Visa claim the AOTC?

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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.

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Next Problem

Doe2A

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Problem – Doe2APlease 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 | Same Address

Roanoke, VA 24040 (Roanoke Co.)

Dependents:Student Doe2A Son 123-12-1232 Born: 01/01/1993 (20)

During 2013 John Doe2A paid the following:1) Qualified Education Expenses: $12,0002) Over one-half of Student’s Support.

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Problem – Doe2A

John’s W-2 123-12-1234 Jane’s W-2 123-12-1233Occupation: Worker Occupation: WorkerA Company A Company999 Main Street 999 Main StreetRoanoke, VA 24019 Roanoke, VA 24019EIN 54-1234567 EIN 54-1234567Box 1, 3, 5 $100,000 Box 1, 3, 5 $100,000Box 2 $18,400 Box 2 $18,400Box 4 $6,200 Box 4 $6,200Box 6 $1,450 Box 6 $1,450Box 15 VA 30-541234567 Box 15 VA 30-541234567Box 16 $100,000 Box 16 $100,000Box 17 $5,300 Box 17 $5,300

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Problem – Doe2A

Student’s W-2 123-12-1232 Student’s 1098-TOccupation: WorkerA Company Roanoke School999 Main Street 1000 Main StreetRoanoke, VA 24040 Roanoke, VA 24019EIN 54-1234567 EIN 54-1234566Box 1, 3, 5 $22,400 Service Provider Number: 0436811Box 2 $ Box 1 $12,000Box 4 $1,389 Box 8 XBox 6 $325Box 15 VA 30-541234567 Box 16 $22,400Box 17 $850

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.

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Problem – Doe2A

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Problem – Doe2A

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Problem – Doe2A37-200,000

61-37,866

76-1,066

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Problem – Doe2A

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Problem – Doe2A

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Problem – Doe2A37-22,400

43-16,300

54-2,003

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Problem – Doe2A1-2,500

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

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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.

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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

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Next Problem

Doe3

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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

2,0002) Over one-half of Student’s Support.

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Problem – Doe3John’s W-2 123-52-1234 Jane’s W-2 123-52-1233Occupation: Worker Occupation: WorkerA Company A Company999 Main Street 999 Main StreetRoanoke, VA 24019 Roanoke, VA 24019EIN 54-1234567 EIN 54-1234567Box 1, 3, 5 $50,000 Box 1, 3, 5 $50,000Box 2 $4,200 Box 2 $4,200Box 4 $3,100 Box 4 $3,100Box 6 $725 Box 6 $725Box 15 VA 30-541234567 Box 15 VA 30-541234567Box 16 $50,000 Box 16 $50,000Box 17 $2,400 Box 17 $2,400

HINT: No, the correct answer will not come out to ZERO.

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Problem – Doe3Roanoke SchoolAccount Statement a/o December 31, 2013Student Doe3Date Description Charge Pmt Balance 8/1/2013 Tuition 15,500.00 15,500.00 8/1/2013 Activity Fee 200.00 15,700.008/1/2013 Telecommunications Fee 600.00 16,300.008/1/2013 Parking Fee 200.00 16,500.00 8/1/2013 Board – Meal Plan 2,800.00 19,300.00 8/1/2013 Health Insurance 400.00 19,700.00 8/1/2013 Room Charge 3,600.00 23,300.00 8/1/2013 Roanoke School Scholarship (Qualified Expenses only) 8,000.00 15,300.00 8/15/2013 Virginia Tuition Assistance Grant (Tuition only) 1,300.00 14,000.00 8/17/2013 Company A – Scholarship (any expense) 2,000.00 12,000.008/20/2013 Unsubsidized Federal Stafford Loan 10,000.00 2,000.008/20/2013 Payment on Account – John Check 2,000.00 -

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Problem – Doe3Student’s 1098-TRoanoke School1000 Main StreetRoanoke, VA 24019EIN 54-1234566Service Provider Number: 0436811Box 1 $ 15,700Box 5 $ 9,300Box 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-2A Company999 Main StreetRoanoke, VA 24040EIN 54-1234567Box 1, 3, 5 $22,400Box 2 $Box 4 $1,389Box 6 $325Box 15 VA 30-541234567 Box 16 $22,400Box 17 $850

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Problem – Doe3

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Problem – Doe3

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Problem – Doe337-100,000

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

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Problem – Doe3

8-1,000 Refundable

19-1,500 Non-Refundable

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Problem – Doe3

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Problem – Doe3

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Problem – Doec3

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Pass out Answer Key

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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).

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Questions?

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Benny has a Question.

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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

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Thank You.

The End!

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NOTES________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________