Question on American Opportunities tax credit. I learned from a friend a means of taking the credit even though my sons scholarship was roughly equal to the qualified expenses on his 1098T. It seems if the scholarships are unrestricted that you can "designate" that they be used for unqualified - and thus taxable school expenses. While this increases the dependant childs taxable income, it reduces the scholarship monies that must be subtracted off the qualified amount and may allow the parent to take the AO college expense credit up to $2500 for 2009 and 2010. It almost seems to good to be true but there is an example on IRS publication 970 which shows exactly such a case on page 11.
While I am fairly certain I can claim the credit in this manner for 2010, my question is can I go back and get the credit for 2009 by filing an amended return for both my son and myself. While my son had earned income of $4400 in 2009 and would have to pay additional tax and penaltied on the additioanl $4000 of income, this should be more than offest by the credit I would receive at a 25% income bracket. Would love to get some feedback on this - thanks!
While I am fairly certain I can claim the credit in this manner for 2010, my question is can I go back and get the credit for 2009 by filing an amended return for both my son and myself. While my son had earned income of $4400 in 2009 and would have to pay additional tax and penaltied on the additioanl $4000 of income, this should be more than offest by the credit I would receive at a 25% income bracket. Would love to get some feedback on this - thanks!
3 comments:
Dear Shawn, if you are eligible to claim the credit you can amend the tax return for 2009. Now whether you should amend the tax return or not will depend on overall gain you will receive. In essence if the additional refund is more than what you pay out in taxes (including penalties and interest), then you should amend the 2009 tax return otherwise not.
I hope this explanation will help you determine if you are ready to amend your return.
Good luck,
Web Tax Office Team
http://webtaxoffice.com
Thanks. Just curious if you had heard about allocating unrestricted scholarships in such a manner to become eligible for the AOR credit? There are a few people in our office that are pretty good with taxes and missed it. I personally stand to get about $4500 back from something I almost overlooked
Shawn, I personally feel that if the tax law allows a deduction or credit then you should not shy away and leave the money on the table. As far your co-workers are concerned, they should also evaluate if it will benefit them to file an amended tax return.
Good luck,
Web Tax Office Team
http://webtaxoffice.com
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