American Opportunity Tax Credit Questions

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American Opportunity Tax Credit Questions

Post by SimonJester » Mon Oct 30, 2017 8:50 am

So it looks like you can claim expenses paid for Books against the American Opportunity Tax Credit, do you just save receipts for these books?

What are some of the logistics of this? Can the dependent student purchase these with their bank account or does the parent have to purchase with theirs and save the receipts? What about the $50 application fee to various colleges can this be included in the credit?

Or it is safer to just pay the first $4,000 of tuition from our own bank account and use 529 funds for books and other expenses?
"They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." - Benjamin Franklin

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Re: American Opportunity Tax Credit Questions

Post by johne417 » Mon Oct 30, 2017 9:13 am

Save all receipts, in case of an audit. No reason the 529 would be safer because you'd have to supply receipts for the 529 qualified withdrawals anyways.

BTW, the only reason any of this applies and you end up having to show documentation is if you do get audited.

In terms of does it matter if the kid or you pays the upfront charge for the books, I'm not sure.

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Re: American Opportunity Tax Credit Questions

Post by OnTrack2020 » Mon Oct 30, 2017 9:32 am

Our older son purchases his books at the university (bookstore) he attends. The purchased books show up as a separate line item on his tuition statement.

Our younger son pay for his books at the community college he attends. We have him save his receipts. He pays for the books out of his checking account with a debit/credit card, but we have a taxable account for him that is earmarked for college, so we transfer the money over to that checking account for his books. Now that I think about it, I'm not sure how that part is handled. For our older son, everything is right on the tuition statement. Not sure how it will work this year with our younger son. However, he has over $4,000 in housing and tuition costs.

Yes, I would include the $50 application fee as a college fee/expense.

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