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My brain is melting. (taxxxxxxxxes)


hopskipjump
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Due to several life-is-stupid-sometimes reasons, I am just now officially starting our taxes for the year. We tried and TRIED to find a knowledgeable CPA who knew more-than-me about dealing with "scholarship income" and came up empty. I'm still sort of struck dumb that we never. found. one. who could answer more than one or two questions.

 

So. Here I am in TurboTax Purgatory - dutifully entering in our information and dds.

 

So far:

 

TT has told me that dd does need to file her own tax return. TT (in their "helps") said that she needed to enter in the information from the 1098-T (scholarship "income" form from the university) on to her tax return.

 

However, when I DO that. It says she doesn't quality for any tax breaks - but it's not charging her any income tax on the scholarship income! It's just giving her a tax refund based upon her summer job income.

 

So - I know that can't be right. But. OMG. My brain is melting and I'm only just getting started!!!

 

And - I've read that the scholarship income is taxed at the PARENTS' RATE - but how do they know what our rate IS? If she's filing all of this on her own tax form? There's nothing there asking about our tax rate - only asking if she is a dependent on someone else's (our) taxes. :mellow:

 

Even the "did this person live in your state all year long" question is confusing. SURELY there is a more clear way of asking that question. Was she a resident in another state? No. Did she LIVE somewhere else? Yes. Two different questions, and yet I'm supposed to say NO. She lived in our state all year long. When she didn't. UGH.

 

:ack2: :ack2: :ack2: :ack2: :ack2: :ack2: :ack2: :ack2:

Edited by hopskipjump
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Does her scholarship cover more than tuition? Because the tuition and other covered expenses aren't taxed

 

Yes, it covers more than tuition. Which is a wonderful blessing. Except at tax-time. :ack2: :ack2: :ack2: :ack2: I'm nervous about how much cash she (we) may need to cough up.

 

Next year will be less stressful since we'll have an idea going into this... but this is nerve-wracking and I'm so frustrated that I didn't get this done weeks and weeks ago. But. Life. Stuff. Ugh... :banghead:

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Ack! What's the 8615? 😂😂 oh dear...

 

Yes- finished ours first, but didn't attempt to enter the scholarship info once it said dd needed to file her own taxes.

 

Well,  I just got home and tax day turned into pizza and movie day with the girls.  ;)  

 

I suspect you are entering something incorrectly.  When you are filling out the part that asks for tuition and QEE and then you enter scholarship info, the excess should automatically prompt an 8615 unless the unearned income was less than $2100.

 

https://www.irs.gov/pub/irs-pdf/i8615.pdf

 

For Form 8615, “unearned income†includes all taxable income other than earned income as defined later. Unearned income includes taxable interest, ordinary dividends, capital gains (including capital gain distributions), rents, royalties, etc. It also includes taxable social security benefits, pension and annuity income, taxable scholarship and fellowship grants not reported on Form W-2, unemployment compensation, alimony, and income (other than earned income) received as the beneficiary of a trust.

 

Who Must File Form 8615 must be filed for any child who meets all of the following conditions.

1. The child had more than $2,100 of unearned income.

2. The child is required to file a tax return.

3. The child either:

a. Was under age 18 at the end of 2016,

b. Was age 18 at the end of 2016 and did not have earned income that was more than half of the child's support, or

c. Was a full-time student at least age 19 and under age 24 at the end of 2016 and did not have earned income that was more than half of the child's support

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Thanks @8FillTheHeart! I will be tackling (and, hopefully, finishing) this tomorrow afternoon. I'm sure I've done something incorrectly, so I plan to essentially start fresh forms for both of us and walk it through, step by step, again. Thank you for the 8615 - that information actually is something I do remember reading before... somewhere... so maybe I did fill it in but didn't realize it had a specific name for the form itself (TT is kind of weird that way sometimes).

 

I think, though, now that I'm thinking... that the TT might have listed "taxable interest, capital gains, rent, royalties, etc" in their questionnaire and didn't have (or I overlooked, which is entirrrrely possible) taxable scholarship listed - and I would have said "no" to that. I bet that's exactly where I went wrong.

 

Back to it tomorrow! :driving: :smash: :banghead: :ack2:

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Almost finished & I've finally found the problem, I think?

 

On the 1098-T, the university filed the "amounts billed for qualified tuition and related expenses" with the total for both semesters since, technically, they "Billed" us for the spring semester before the end of 2016. But the "scholarships or grants" is only for the fall semester, since that's all they had technically "Paid" dd's account.

 

So - no matter what I do, Turbo Tax insists that she/we don't owe taxes for 2016 since the "amount billed" (for two semesters) is greater than the "amount paid" (for one semester) in scholarships.

 

So, I guess this will just show up next year? Am I reading this correctly, do you think?

 

Next year, on the 1098-T, she'll be billed for 2 semesters (fall 2017 and spring 2018), but receive scholarships for spring 2017 and fall 2017? And then after she graduates, she'll have that last semester show up on her taxes?

 

GAHHHH!!!

 

Made a last-ditch effort and called more accountants willy-nilly yesterday and Thursday to ask questions. Three of them insisted that this scenario (scholarship exceeding cost of tuition and/or attendance) wasn't possible. I swear, there's a market for tax professionals who know their craft around these parts! :huh:

 

At this point, I'm just filling it all in as accurately as I possibly can and if we are audited, I will bring in all this confusing paperwork to the auditor and tell them, "Good luck. I hope you have better luck than I did back in 2017 when I was trying to do all of this correctly..." It's just scary because the amount owed could be large - especially when compounded by fees and interest... :sad:

Your 1098 sounds like it didn't check the box 7 for the academic yr. You can go in and physically enter the amts so that your taxes incorporate a full academic calendar yr.

 

I wasn't home when dh did our taxes, so he submitted ours saying ds was not a dependent bc he answered the questions that we didn't provide 50% of his expenses. So this yr, unless we submit corrected returns, ds was not claimed by anyone, us or himself.

Edited by 8FillTheHeart
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Yep! I found the spot right after posting and deleted my post - but not quick enough! :) There was a somewhat-hidden spot to type in what she actually paid, and that fixed it all right up.

 

 

I AM FINISHED WITH THE TAXES!! :party:

 

And what she owed wasn't anywhere near as precarious as what I worried. So phew.

 

Next year will be a breeze!!

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Yay, what a relief!  As a complete aside, does everyone have strong feelings about TT vs H&R Block for the tax software being able to handle stuff like this?

 

I've used TaxAct for years, and I do think they handle it fine. However, I'm also one who will read articles to see if we can take more deductions (have dealt with self-employment stuff off & on for years), read the instructions for various forms, coupled with reading on here to make sure I understand various types of situations. We have enough bizarre things come up in our situation that I feel more comfortable researching myself instead of just trusting someone else to do it right (I'd have to know and check up on them, LOL, and then why pay?!)

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Yay, what a relief!  As a complete aside, does everyone have strong feelings about TT vs H&R Block for the tax software being able to handle stuff like this?

 

Seriously - now that I know what I'm looking for - I HIGHLY recommend TT. It really did have everything there that I needed - it just took me a while to put it all together.

 

If Life hadn't thrown a big wad of WTH at us this past month, I would have had larger blocks of time and this wouldn't have taken me nearly this long to sort out. As it was, I only had a couple hours "here" and 30 minutes "there" and it made it difficult for my brain to process everything. That was on me, not on TT.

 

So - for our tax situation, that had accountants (around here, anyway) stumped and not-even-a-little-bit helpful - TT put everything into a nice, tidy box and sorted it right out.

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I hate doing taxes in little bits and bobs of time. It's impossible to really wrap your head around anything when it is constantly interrupted.

 

Yes, and when "away" from the taxes, life was so incredibly stressful that I would just forget anything/everything I'd done. So each time I sat down it was like a brand-new event. ARGH!! Add to it that I was afraid to trust anything the first time around... ugh!

 

Next year, though, all those fields will be pre-highlighted and TT will already know we need to fill in information here-or-there. How easy it will be!

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You made me seem really smart, hopskipjump, the other night when my eldest brother called with questions about his daughter's taxes. She is in college and me knowing the 1098-T (when I don't have a college kid yet) floored him. He said, "Thank you, [dad's first name]." This is a compliment in my family since my dad was known as quite the tax fact guru.  :lol:

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