Originally posted by: anno
maybe I blew it last year.. I didn't figure we could qualify for the HOPE deduction if we weren't actually spending any money. if all the money is free money.. can we still take that? this is our last shot at it, I guess, so.. I need to figure that out.
loan stuff is not relevant, there are no loans.
that bit is relevant.. but the question was probably what part of the scholarships is tax-free!
I am nearly sure that I determined last year that while the scholarship money is far from exempt from taxes, I do not have to consider it as income in deciding whether I contribute the lion's share of her support. I am sure that based on the way the funds have been distributed that last year I contributed most of her support regardless, she lived in my home and was supported by me from january1 to august 13 and most of december and bits in between so I have no worries about guessing wrong on that last year but.. I wouldn't mind a second opinion (third opinion, I guess I have mine and yours now) on that.. because for 2003 tax year she did live probably slightly more than half the year outside my home..
What I posted above is from the IRS on deductions of educational expenses...I was trying to help and you turned this into a 'problem', as far as irrelevance, your provided alot of that. It was hard to try to figure out just what you were trying to get at.
You being nearly sure last year, and coming here now for advice should be a big clue to check into suggestions more, rather than just throw them back. I don't think you understand what = dependant. Also she may still have to file on her own, just because you are 'claiming' her doesn't mean she is exempt herself.
For a tax dependant the criteria is clear, there are 5 'tests':
1)
Member of household/relationship test: must be part of the household the entire year (not necessarily living in the 'house' though)
2)
Citizen or Resident test:Citizen/resident of the US, Canada or Mexico for any part of the year
3)
Joint return test: Not filing a joint return with anyone
4)
Support test: more than half total support was provided (this is the problem I see, if she has money left over that is 'free' and seems abundant by your description, why are you taking the deduction?....this just seems odd to me...the idea is the support is supposed to be needed, you are not supposed to say hey take 100% of your money and roll it into investments and I will write you off as a dependant...which leads to #5 below and often people assume a dependant doesn't have to file their own taxes ever.)
5)
Gross income test:Gross income of less than $3,050 or more than that and also be your child and under 19 at the end of the tax year and not in college or under 24 at the end of the tax year and a full time student for more than 5 months during the tax year.
Now I was trying to give you pointers as not all scholarships and grants are considered equal. Some are not taxable, others are. Outside whatever is not used for qualified educational expenses that is. If the money is 'tax-free' then you reduce qualified educational expenses by the amount of the tax-free money. If you come up with $0, it may be difficult to say you supported more than 50% of her expenses....there are exceptions, but we would need to know how much she got in money for school, what the costs were in total for the year and what the costs were for.
well.. it's a course (2 courses) offered by the university of south carolina, but taught in italy.. so.. seems to me that getting to italy is a required part of the course(s), but.. I am aware that I may lose that point.. just asking, on the off chance someone who knows might say I win it! my brother in law is a commercial pilot and we may still manage to get the airfare cheap enough it won't matter anyway.
Thing is transportation costs are not a qualified expense though....I was merely replying to help you and possibly get you thinking of solutions....most of the advice given in this thread was not a direct answer to any question, but merely suggestions that often got the person thinking and helping themselves. None of us can really give a 100% guaranteed answer as 1) we are only getting small snapshots of specifics tax problems, not the whole tax situation and 2) most don't disclose all the facts in truth even if asked for them.
well.. here again.. I thought we weren't eligible for these because we weren't actually spending any money.. my take on the gift money thing was that tuition and required fees and things required for the courses (books, supplies that are required.. like the film for photography but not like pencils or paper or printer ink.. ) are deductable before you have to count it = income. so we take the form the school sends us which lists the deductable fees, and add the receipts for books and film and processing and like that, and then what's left over (which is a LOT!) we'll owe taxes on. is it possible we ARE (or she IS) eligible for this hope thing or this lifetime learning thing? I really had convinced myself that wasn't possible..
I am trying to help you. The HOPE is more beneficial but less flexible, the lifetime learning is less beneficial (most of the time) but more flexible. Room and board, medical expenses (including those required by the school), Books and supplies unless required to be paid to enroll in the course, transportation, basic living expenses, any course involving sports, games or hobbies except lifetime learning allows these providing they improve job skills or open up a job opportunity by having them...these are all examples of *NON-QUALIFYING* expenses. These are also commonly claimed as qualifying expenses....doesn't make it right though.
You also can't double benefit...you can't claim Schedule A or C deductions and do HOPE/Lifetime learning. You both can't claim them either if she files as a dependant and separately. You *may* realize this and if so *ignore* this advice. I am speaking in general here as others may also have a similar question.
what the heck are you talkin' about now? rofl. she just wants to do a 4 week summer study abroad thing. studying.. italian. she will be back home and back to her regularly scheduled program in august..
I was referring to study abroad and how it's difficult to get the costs covered....if she could find a sponsor the deal is closed...if not you are not going to be able to deduct that.
The last thing to consider as well is 'what kind of income' is she realistically looking at?
now you're giving me educational advice? I don't know what kind of income she's realistically looking at, but you don't know what her career goals are either. MY goal as a parent has been to raise self-supporting happy people. I don't care if she's ever rich.. I don't think she cares about that either, she does hope to be able to pay her bills. currently she's a 19yo honors college junior with scholarships that pay all her expenses and pocket money.. who can complain?? HER goal is to get out of undergrad with the skills to get a job doing something she can stand to do if she has to, and go on to grad school.. and she's tryin' her darndest to see to it that she doesn't have to pay for the next degree either. she works hard and always has.. and she WILL be successful, on her own terms.. no doubts. rich is not one of her goals.. debt-free professional satisfaction is, and.. I think she's on the right track for that.
I know a Master's holding social worker (MSW I think is the degree) with about $60k in monies to repay for a job that pays around $30-35k.....she spends 'rent' on her loans each month....
that's unfortunate, but.. why did you think I needed to know this?
There is no need to get hostile, this is a legitimate concern and one that is not planned out usually until the payments for the education come rolling in...if she is sailing on all free money then it is not a concern. This was merely *advice*. You are right, I and no one else knows anything about your situation other than what you told us...however since it's obvious you don't understand the full situation *we* will probably hint at other things along the way. I didn't say anything about rich or poor...my statements were to provide insight having witnessed people that could have gotten through college without debt but chose to take added expenses and a 'few' loans along the way to aid their free money and allow them to travel, take $1000, 2000, 5000 dollar workshops, etc. These are all fun and educational, but take the advice or leave it....they are *suggestions*, no one is trying to tell you what to do, you came here asking us for *advice*.
ah... ok. now that my tea leaves been read, anyone know anything about my tax questions?
You may not get answers with that attitude here. I answered much of what you asked. No one will be able to spoon-fed you everything.
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