Thank you. Yes, his is billed so that it's really just 4 years, with books in year 5.Some schools deliberately bill in such a way that there are exactly 4 years of college payments. Fall semester payment is due in August, spring semester is due in early December. Makes AOTC claiming much more straightforward.There are 5 potential years a 4 year degree can qualify for AOTC credit but it's only allowed for 4. Skipping a year may be more beneficial than having child take credit. The first semester and last semester are not full years. Be careful on timing payment for last spring semester.
Only one of my kids' colleges billed in this way, my oldest, but I preferred it. The 1/2 - 1 - 1 - 1 - 1/2 cycle created issues claiming the first year with only one semester of expenses.
OP, your student will need to claim a large amount is taxable scholarship income - everything not used for tuition+mandatory fees+books AND an extra $4k for the AOTC. You cannot claim them as a dependent. They will not be eligible for the refundable portion of the credit (but it can cover the increased taxes due to claiming taxable scholarship income).
The Kiddie Tax ends up being more than the 25% that is saved, so I think we'd just do up to $1600, which is his tax liability. I think that would give us the best outcome as a family. We'd loss the $500, but he'd gain $1600.
Is there any reason that I can't go back to claiming him as a dependent for 2024? We will be under the income limit again.
Statistics: Posted by lunean — Sat Mar 02, 2024 5:28 pm — Replies 11 — Views 818