Family member in College? Need Tax Breaks?

There are three different tax breaks that might help you.

  • Tuition and Fees.  Required document is 1098-T.  In addition to the tuition and fees, I will need the name, address and Tax ID number of the school.  Unfortunately, the student is the one who gets the 1098-T – not the parent!  If they lost it – they will need to go to www.1098T.com.
  • Other expenses.  If your student doesn’t already have a degree you can deduct books, supplies, special software, maybe even their computer.  Be sure to get all related costs from your student. 
  • College Saving Plans.  Did you use a Section 529 Plan or a “Coverdell Savings Accounts” to help pay for the costs?  If so, you will be receiving IRS Form 1099-Q.  Your money grew – tax free.  We will need to show that the funds were used for “qualified expenses” otherwise you will be taxed now.  You also might subject to a penalty – so your tax preparer will need records of any and all costs.
  • Youngster’s Tax Returns.  If the student is your child, I can run what is called a “Kiddie Tax”.  Make sure your child does not file their own return until we’ve gone over the rules. 

 

Source: Tax News & Tips, Year End 2013