General Instructions

To receive any education credit:

• The student must have a 1098T from the attended institution.
• The taxpayer must have monies to pay for the expenses. This includes taxable and non-taxable income, gifts and/or student loans

In addition, a copy of the student’s account summary is required for accurate tax preparation. These statements are available on-line. Determine if the student received loans as well as Scholarship/Grants, or otherwise paid in their own money to the school. If so, the student determines which monies are used for which expenses.

Normally it is a tax advantage to use loans or own money for the qualifying expenses and then pay tax on the Scholarship/Grants that are then used for non-qualifying expenses.

The American Opportunity Credit (AOC) or Lifetime Learning Credit (LTL) Columns calculate both (a) the maximum allowable expenses for the credit. This also maximizes the taxable scholarship/grants. and (b) the minimum allowable expenses to enter for the credit. This also minimizes the taxable scholarship/grants. Determine which is better for the taxpayer and use that.

The Calculator also allows some of the Unrestricted Scholarship/Grants to be used for qualified expenses, which results in smaller credits and less taxable scholarship/grants. This is usually used only when (a) the Taxpayer is the student and wishes to reduce taxable income or (b) the student is a dependent and the taxable scholarship/grants trigger the Kiddie Tax (see Using Unrestricted Scholarship/Grants for Ed Expense for more information) .

Tuition and Fees Deduction

The Tuition and Fees Deduction is retroactive to TY2018, TY2019 and TY2020. In general American Opportunity Credit and Lifetime Learning Credit are more advantageous. Use Tuition and Fees when encountering the following:

• TP is not eligible for AOC and TP’s marginal tax rate is above 20%.
• When there is a need to reduce TP’s AGI.
• Use the amount in Tuition and Fees Line of the calculator.
• OREGON: Use if TP not eligible for AOC and has 0 taxable income. [more information in LTL section.

OREGON INFORMATION: If taking Tuition and Fees on the federal return DO NOT use subtraction 308. on state return. Amount has already been subtracted from AGI.

American Opportunity Credit

The basic highlights of the American Opportunity Credit are:

• Credit up to $2,500. 40% of which may be refundable. (See Information on Taxpayer under 24).
• Available ONLY if the student had not completed the first 4 years of postsecondary education.
• Completion of first 4 years. A student has completed the first 4 years of postsecondary education if the institution at which the student is enrolled awards the student 4 years of academic credit at that institution for coursework completed by the student before [the taxyear]. This student generally wouldn't be an eligible student for purposes of the American opportunity credit. [IRS 2019 Publication 970 page 18]
• For example a student who is awarded their 4 years of academic credit by December 31, 2019 will not be eligible for AOC in TY2020 even if they have taken only 3 years of AOC.
• Available ONLY for 4 tax years per eligible student.
• Student must be pursuing a program leading to a degree or other recognized education credential.
• Student must be enrolled at least half-time.
• The student had not been convicted of a felony for possessing or distributing a controlled substance.
• Includes books and materials.
• Must provide educational institution's EIN
• Cannot claim if filing Status is MFS

Lifetime Learning Credit

The basic highlights of the Lifetime Learning Credit are:

• Credit up to $2,000. Credit limied to amount of tax owed.
• Available for all years of postsecondary education and for courses to acquire or improve job skills
• Available for an unlimited number of tax years.
• Student does not need to be pursuing a program leading to a degree or other recognized education credential.
• Available for one or more courses
• Felony drug convictions do not make the student ineligible.
• Does NOT include books and materials unless special conditions apply (See information on Tuition and Fees)
• Cannot claim if filing Status is MFS

OREGON INFORMATION: Check to make sure that the TP used the LTL Credit on the federal return. If Taxable Income is zero, the LTL credit will have no effect since it is not refundable. If you use subtraction 308 on the Oregon return, the Oregon Department of Revenue may reject the subtraction because it sees no ed credit on the federal return. Instead use Tuition and Fees Deduction as this has the same effect of reducing taxable income. If you use Tuition and Fees Deduction DO NOT use the 308 subtraction on the state return.

Taxpayer is Under the Age of 24

Special rules for the American Opportunity Credit apply if the taxpayer is under the age of 24. The taxpayer may or may not be eligible for the refundable portion of the credit. Use this flow chart or the conditions following it to determine eligibility:


Special rules for the American Opportunity Credit. If the taxpayer is under the age of 24 and meets all of the following conditions, the taxpayer is not eligible for the refundable portion of the credit. The taxpayer is allowed to use the credit to reduce their tax as a nonrefundable credit only. The Taxpayer does not qualify for a refundable credit if items 1 (a, b, or c), 2, and 3 below apply.

1. The Taxpayer is
1. Under age 18 at the end of the Tax Year,
2. Age 18 at the end of the Tax Year and the Taxpayer's earned income (defined below) was less than one-half of the Taxpayer's support (defined below),
3. Over age 18 and under age 24 at the end of 2018 and a full-time student (defined below) and the Taxpayer's earned income (defined below) was less than one-half of the Taxpayer's support (defined below).
2. At least one of the Taxpayer's parents was alive at the end of the Tax Year.
3. the Taxpayer is filing a return as single, head of household, qualifying widow(er), or married filing separately for the Tax Year.

The following definitions are from IRS Publication 970 for Tax Year 2018:

Earned income. Earned income includes wages, salaries, professional fees, and other payments received for personal services actually performed. Earned income includes the part of any scholarship or fellowship grant that represents payment for teaching, research, or other services performed by the student that are required as a condition for receiving the scholarship or fellowship grant.

Support. The Taxpayer's support includes food, shelter, clothing, medical and dental care, education, and the like. Generally, the amount of the item of support will be the amount of expenses incurred by the one furnishing such item. If the item of support is in the form of property or lodging, measure the amount of such item of support by its fair market value. However, a scholarship received by the Taxpayer isn't considered support if the Taxpayer is a full-time student. See Pub. 501 for details.

Full-time student. The Taxpayer is a full-time student for the Tax Year if during any part of any 5 calendar months during the year the Taxpayer was enrolled as a full-time student at an eligible educational institution (defined earlier), or took a full-time, on-farm training course given by such an institution or by a state, county, or local government agency.

*** Maybe only appear when checked YES?

Optimizing the Education Credit
When EIC, PTC or Child Tax Credit is involved, it may be advantageous to reduce education expenses from the maximum education credit by reducing the amount of taxable scholarship monies. This requires applying some of the unrestricted scholarship to qualified expenses, thereby reducing the taxable scholarship money.

The preparer has two options:

• The Bogart Education Calculator is designed to provide the optimum federal advantage to the taxpayer. It does not take into account the effect of changes on the Oregon Return.
• This calculator can be used to find a close solution by applying the unrestricted scholarship money to qualified expenses and changing the values in TaxSlayer. If the Oregon return has been prepared, this will reflect the effect on both the federal and state return.
• The preparer should choose whichever process they feel most comfortible with.

Below is a table indicating if reducing education expenses and taxable scholarship money may be advantageous:

Item	Student is Taxpayer or Spouse	Student is Dependent
No Taxable Scholarship	No	No
EIC	Maybe	No
Child Tax Credit	No-if no dependent child under the age of 17 Maybe-otherwise	No-if no dependent child under the age of 17 Maybe-otherwise
PTC	Maybe	No-if dependent AGI less than $12,400 (TY2020) Maybe-otherwise

Student is a Dependent

If the student is a dependent:

• The Education Credit goes to the Taxpayer
• The Taxable portion of the Scholarship/Grant is income for the Student.
• Under certain conditions the Scholarship/Grant may trigger the Kiddie Tax for the Student

Enter Taxpayer's Non-Schloarship Income from the Tax Return here

This includes both taxable and non-taxable income that are listed on the return. It does not include scholarship/grant money.

TIP: ENTER AGI (before taxable scholarship) if it is greater than the allowable credit, since that covers the allowable credit.

Taxpayer's Non-Schloarship Other Sources of Funds and Student Loans are entered elsewhere.

General Information about Taxpayer's Money and the Education Credit

The education credit is limited to the amount of non scholarship/grant money the Taxpayer has to pay for qualified education expenses. This money falls into three broad categories

• Taxpayer's Non-Schloarship Income from the Tax Return:These are monies that are included as income on the tax return both taxable and non-taxable.
  It does not include scholarship/grant money.
• Taxpayer's Non-Schloarship Other Sources of Funds:These are monies not on the tax return. They include non-student loans, withdrawals from savings, gifts deposited with the school or gifts spent on qualified expenses.
• Student Loans

These three categories are entered in three different places on the form.

Caution – Possible denial of credit by IRS
If the taxpayer does not have enough income on their tax return (taxable and non-taxable), the IRS may reject their claim for a credit until they can substantiate that they had funds other than scholarship money to pay the qualified expenses claimed on the return.

For example, consider a full time student taxpayer who has an AGI of $1000 and no non-taxable income. If they are funding their education with scholarships/grants and student loans they will most likely have their claim for an education credit limited to $1000 until they send the IRS proof of other monies or student loans. This is usually done in response to a letter from the IRS denying some or all of the claimed credit on their tax return.

TIP: The system will issue a warning when this is the case. Make sure the Taxpayer keeps a copy of this sheet and explain to them that they may get a notice from the IRS and they just need to have the paperwork ready to respond to get the full credit.

Enter Taxpayer's Non-Schloarship Other Sources of Funds here

These are monies not on the tax return and includes non-student loans, withdrawals from savings, etc. It also includes gifts deposited with the school or spent on qualified expenses.

Tip: ENTER 0, if AGI is greater than the requested credit, since AGI will cover the allowable credit.

Taxpayer's Non-Schloarship Income from the Tax Return and Student Loans are entered elsewhere.

General Information about Taxpayer's Money and the Education Credit

The education credit is limited to the amount of non scholarship/grant money the Taxpayer has to pay for qualified education expenses. This money falls into three broad categories

• Taxpayer's Non-Schloarship Income from the Tax Return:These are monies that are included as income on the tax return both taxable and non-taxable.
  It does not include scholarship/grant money.
• Taxpayer's Non-Schloarship Other Sources of Funds:These are monies not on the tax return. They include non-student loans, withdrawals from savings, gifts deposited with the school or gifts spent on qualified expenses.
• Student Loans

These three categories are entered in three different places on the form.

Caution – Possible denial of credit by IRS
If the taxpayer does not have enough income on their tax return (taxable and non-taxable), the IRS may reject their claim for a credit until they can substantiate that they had funds other than scholarship money to pay the qualified expenses claimed on the return.

For example, consider a full time student taxpayer who has an AGI of $1000 and no non-taxable income. If they are funding their education with scholarships/grants and student loans they will most likely have their claim for an education credit limited to $1000 until they send the IRS proof of other monies or student loans. This is usually done in response to a letter from the IRS denying some or all of the claimed credit on their tax return.

TIP: The system will issue a warning when this is the case. Make sure the Taxpayer keeps a copy of this sheet and explain to them that they may get a notice from the IRS and they just need to have the paperwork ready to respond to get the full credit.

Enter Student Direct Payments for Housing Costs Here

Oregon allows a subtraction, code 333, for amounts paid with taxable scholarship money by a student that is paid directly for rent, utilites or other housing expenses. The student should have documentation such as checks, receipts, or transfers to prove these expenses.

Enter Student Loans here

Taxpayer's Non-Schloarship Income from the Tax Return and Taxpayer's Non-Schloarship Other Sources of Funds are entered elsewhere.

General Information about Taxpayer's Money and the Education Credit

The education credit is limited to the amount of non scholarship/grant money the Taxpayer has to pay for qualified education expenses. This money falls into three broad categories

• Taxpayer's Non-Schloarship Income from the Tax Return:These are monies that are included as income on the tax return both taxable and non-taxable.
  It does not include scholarship/grant money.
• Taxpayer's Non-Schloarship Other Sources of Funds:These are monies not on the tax return. They include non-student loans, withdrawals from savings, gifts deposited with the school or gifts spent on qualified expenses.
• Student Loans

These three categories are entered in three different places on the form.

Caution – Possible denial of credit by IRS
If the taxpayer does not have enough income on their tax return (taxable and non-taxable), the IRS may reject their claim for a credit until they can substantiate that they had funds other than scholarship money to pay the qualified expenses claimed on the return.

For example, consider a full time student taxpayer who has an AGI of $1000 and no non-taxable income. If they are funding their education with scholarships/grants and student loans they will most likely have their claim for an education credit limited to $1000 until they send the IRS proof of other monies or student loans. This is usually done in response to a letter from the IRS denying some or all of the claimed credit on their tax return.

TIP: The system will issue a warning when this is the case. Make sure the Taxpayer keeps a copy of this sheet and explain to them that they may get a notice from the IRS and they just need to have the paperwork ready to respond to get the full credit.

Qualified Education Expenses.

For purposes of tax-free scholarships and fellowship grants, these are expenses for:

• Tuition and fees required to enroll at or attend an eligible educational institution;
• Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution.

These items must be required of all students in your course of instruction.

Expenses that don't qualify.

Qualified education expenses DO NOT include the cost of:

• Room and board,
• Travel/Transfportation Fees,
• Research,
• Clerical help, or
• Equipment and other expenses that aren't required for enrollment in or attendance at an eligible educational institution.
• Insurance,
• Medical expenses (including student health fees)
• Similar personal, living, or family expenses.

This is true even if the amount must be paid to the institution as a condition of enrollment or attendance.

Tuition and Fees

Include All qualified expenses that are eligible for both American Opportunity Credit and Life Time Learning Credit

• Tuition and fees required to enroll at or to attend an eligible educational institution;
• Related fees such as: Student activity fees that are required for the courses at the eligible educational institution.
• Course-related books, supplies, and equipment only if the fees and expenses:
  • Are required of all students
  • Is required to be paid to the institution
• Expenses and Fees must be required of all students enrolled in the course

These items must be required of all students in your course of instruction.

NOTE:The college bookstore is usually not the actual University, it's a coop for the students.

Example A kit that a beauty school requires of all students and that can only be purchased at the beauty school at the time of enrollment when paying tuition to the institution would be an example of supplies qualifying under tuition and fees.

Do Not Include:

• Fees that are not required of all students
• Fees for personal, living or family use such as athletic fees, health fees, etc.
• Qualified books or materials that can be purchased through a third-party or that are not required. These are entered on the Qualified Books or Qualifed Materials lines.
• Any items that are excluded from the Life Time Learning Credit.
  This is true even if the amount must be paid to the institution as a condition of enrollment or attendance.

Qualified Books

Expenses for books, supplies, and equipment needed for a course of study are included in qualified education expenses whether or not the materials are purchased from the educational institution. Do not include items that are included the Tuition and Fees Line.

Qualified Materials

Expenses for books, supplies, and equip-ment needed for a course of study are included in qualified education expenses whether or not the materials are purchased from the educational institution. Do not include items that are included the Tuition and Fees Line.

Restricted Scholarship/Grants

Restricted Scholarship/Grants can only be used for qualified expenses. They cannot be used for other related expenses, such as room and board, travel, etc.

Restricted scholarships/grants may come from an organization, such as a local bank, rotary, or high school athletic booster group. The scholarships/grants may only be used as stated by the granting organization. The student is responsible for researching and clarifying any restrictions. The default position is that the scholarship/grant is restricted if the student can't verify that the scholarship/grant is unrestricted.

Unrestricted Scholarship/Grants

Unrestricted Scholarship/Grants can be used for non-qualified expenses.

Unrestricted scholarships/grants may be from a government needs-based program such as Pell grants and/or Oregon Opportunity Grants. Some private scholarships such as the Ford Foundation Grants are also unrestricted.

The fact that the educational institution applies the scholarship or fellowship grant to qualified education expenses, such as tuition and related fees, doesn't prevent the student from choosing to apply certain scholarships or fellowship Scholarship/Grants to the student’s actual non-qualified expenses. By making this choice (that is, by including the part of the scholarship or fellowship grant applied to the student’s non-qualified expenses in income), the student may increase taxable income and may be required to file a tax return. But this allows payments made in cash, by check, by credit or debit card, or with borrowed funds such as a student loan to be applied to qualified education expenses. [IRS 2018 Publication 970 p16 col 2]

Maximum Ed Credit

This line shows the Maximum Education Credit that is available for both the American Opportunity Credit and the Lifetime Learning Credit. It also results in the maximum taxable scholarship for the student.

The calculator allows unrestricted scholarship monies to be applied to qualified education expenses. This might be desirable in the case where:

1. the Student is a Dependent and the taxable income triggers the Kiddie Tax or
2. the Taxpayer/Spouse is the Student and the taxpayer wishes to reduce scholarship income, e.g., EIC.

Oregon Tuition and Fees Subtraction Code 308

NOTE: Subtraction code 308 expired at the end of 2020

Oregon allows a subtraction for Tuition and Fees if the Taxpayer claims an American Opportunity Credit or a Lifetime Learning Credit. No subtraction is allowed if the TaxPayer claims a Tuition and Fees Adjustment, since that amount flows through to the taxpayer's Oregon return via the taxpayer's federal adjusted gross income.

The following conditions apply:

• The maximum subtraction is $4,000
• The amount is equal to the amount that could have been claimed on the Federal Return as a Tuition and Fees Adjustment
• The Taxpyer cannot claim the subtraction if:
  • the taxpayer's filing status is married filing separately;
  • the taxpayer can be claimed as a dependent by another per-son on their return, even if that person doesn’t claim them; or
  • the taxpayer's federal modified adjusted gross income(MAGI) exceeds the limitations for the federal tuition and fees deduction as stated on federal Form 8917. These amounts are $80,000 ($130,000 if MFJ) for tax years 2018, 2019 and 2020.

[See Oregon 2019 Publication 17, Page 73 150-101-431 (Rev. 04-30-20) ]

Oregon Scholarship Used for Housing. Subtraction Code 333

Oregon Subtraction 333: Scholarship Awards used for Housing Expenses allows a taxpayer to subtract taxable scholarship money used by the student to pay rent, utilities or other housing expenses, up to the amount of the taxable scholarship money.

“Housing expenses” are the reasonable expenses paid or incurred during the taxable year by a student for housing for the student. The term includes expenses attributable to the housing (such as utilities and insurance) and not otherwise taken into account as a deduction on the federal income tax return of the individual. Housing expenses will be treated as reasonable to the extent the Oregon Department of Revenue determines the expenses are neither lavish nor extravagant under the circumstances.

TIP: Housing expenses do not include items such as food, phone, etc.

Students Living at Home

Question: When can a college student living in their parent’s home use subtraction 333 to reduce student’s taxable income?

Answer: The only time that would be allowed is if the student is actually be paying rent, utilities, or other housing related expenses to the parents. The subtraction would not be allowed if the student is living at home rent free because in that case the taxable scholarship would presumably have been used for non-housing expenses such as food or entertainment.

The student should have receipts, checks or bank transfers to verify these payments.

References

Oregon Publication 17

Scholarship awards used for housing expenses (ORS 316.846) [Subtraction code 333] You can subtract scholarships used for housing expenses from Oregon income. You must include the scholarship in federal taxable income for the year to claim the subtraction. You can claim the subtraction if the scholarship was awarded to you or your dependent. You can subtract only the amount used for housing expenses for the scholarship recipient. The recipient must attend an accredited community college, college, university, or other institution of higher education. You must reduce your subtraction if you’re claiming the same housing expenses as a deduction on your return. Your subtraction can’t be more than the amount of scholarship income included in federal taxable income. There is no carryforward allowed.

ORS 316.846 Scholarship awards used for housing expenses

1. There shall be subtracted from federal taxable income amounts received from a scholarship awarded to the taxpayer or a dependent of the taxpayer that are used for housing expenses of the scholarship recipient at the time the scholarship recipient is attending an accredited community college, college, university or other institution of higher education.
2. A subtraction may not be allowed under this section if the amounts described in subsection (1) of this section:
   1. Are not included in the taxpayer’s federal gross income for the tax year; or
   2. Are taken into account as a deduction on the taxpayer’s federal income tax return for the tax year. [1999 c.747 §2]

Oregon Department of Revenue Rule 150-316-0630 Scholarship Awards used for Housing Expenses

1. If a scholarship award is used to pay housing expenses, the taxpayer may subtract the amount paid for such expenses from federal taxable income, but not in excess of the amount of the award included in federal taxable income.
2. For purposes of ORS 316.846 (Scholarship awards used for housing expenses) and this rule, “housing expenses” are the reasonable expenses paid or incurred during the taxable year by an individual for housing for the individual. The term includes expenses attributable to the housing (such as utilities and insurance) and not otherwise taken into account as a deduction on the federal income tax return of the individual. Housing expenses will be treated as reasonable to the extent the department determines the expenses are neither lavish nor extravagant under the circumstances.
   
   Example 1: Jasmine, a student at Oregon State University, receives a scholarship award that she includes in her federal taxable income. She buys a house close to the school. She uses part of the scholarship award to pay the mortgage interest and property taxes. She also uses part of the scholarship award to buy food and to fix the roof. Jasmine may subtract the mortgage interest and property taxes from her federal taxable income on her Oregon return if she does not claim them as itemized deductions on her federal return, but not in excess of the amount of the award included in federal taxable income. She may not subtract the food purchases and the cost of fixing the roof.
   
   Example 2: Louis, a student at Portland State University, receives a scholarship award that he includes in his federal taxable income. He rents an apartment with a roommate about three blocks from school. In addition to the rent he is responsible for half of the electric bill and for a monthly parking fee at the apartment complex. He also pays for half of the monthly fee to Rent-A-Center to rent a sofa and loveseat. He uses part of the scholarship award to pay for these housing expenses. Louis may subtract from his federal taxable income on his Oregon return the sum of his portion of the rent, his portion of the electric bill, the parking fees, and his portion of the monthly fees for renting a sofa and loveseat, to the extent such sum does not exceed the amount of the award included in federal taxable income.

Oregon Scholarship Used for Housing. Subtraction Code 333

"You can subtract scholarships used for housing expenses from Oregon income. You must include the scholarship in federal taxable income for the year to claim the subtraction.

You can claim the subtraction if the scholarship was awarded to you or your dependent. You can subtract only the amount used for housing expenses for the scholarship recipient. The recipient must attend an accredited community college, college, university, or other institution of higher education.

You must reduce your subtraction if you’re claiming the same housing expenses as a deduction on your return. Your subtraction can’t be more than the amount of scholarship income included in federal taxable income. There is no carryforward allowed." [Oregon 2019 Publication 17, Page 73 150-101-431 (Rev. 04-30-20) ]

Minimum Scholarship/Grants

This line shows the Minimum Education Credit that is available for both the American Opportunity Credit and the Lifetime Learning Credit. It also results in the minimum taxable scholarship for the student.

This is desirable if the Taxpayer is taking the Lifetime Learning Credit and the marginal tax rate is over 20%. The Lifetime Learning Credit is 20% of the qualified expenses up to $2,000.

Using Unrestricted Scholarship/Grants for Ed Expenses

In some cases the taxpayer may find it advantageous to use some of the unrestricted Scholarship/Grants for education expenses.
Two of the most common are:

• When reducing income will increase other tax credits, e.g., EIC
• When the Kiddie Tax (Form 8615) is triggered. (This is rare. See below.)
  
  • The Kiddie Tax is Out of Scope Except for TY2018 and TY2019.
  • The Kiddie Tax is in Scope for TY2018 and TY2019 only if the Taxpayer opts to use the estates and trusts rates for those years.

TIP: What to Enter to Reduce Scholarships by a fixed amount

• Rules: These differ by credit type: AOC or LTL
• AOC: To reduce taxable scholarship money by a fixed amount for AOC enter the amount you want to reduce the scholarship by plus the amount in box "H" of the AOC column at the bottom of the calculation table.
• LTL: To reduce taxable scholarship money by a fixed amount for LTL enter the amount you want to reduce the scholarship by plus the amount in box "H" at the bottom of the calculation table less the total of books and materials .
• Example: Assume TP income is $60,000, Tuition $12,000, Books $1,250 and an unrestricted Scholarship of $12,000.
  The maximum ed credit for AOC will be $4,000 with a taxable scholarship of $2,750. Box "H" is $9,250.
  The maximum ed credit for LTL will be $10,000 with a taxable scholarship of $8,750. Box "H" is $3,250.
• AOC: If you want to reduce the taxable scholarship income by $1,000, you use $10,250 ($1,000 + $9,250) of the unrestricted scholarship for qualifying expenses in the AOC column.
• LTL: If you want to reduce the taxable scholarship income by $1,000, you use $3,000 ($1,000 + $3,250 - $1,250) of the unrestricted scholarship for qualifying expenses in the LTL column.
• Thanks to Jim Blackburn for identifying this methodology.

Kiddie Tax -- Applies only if the Student is a dependent of the taxpayer.

When calculating Education Credits, the Kiddie Tax may be triggered when ALL of the following criteria are met:

1. Taxable Scholarship/Grants plus other unearned income exceed $2,100(TY2018), $2,200(TY2019 & TY2020).
2. The dependent is required to file a tax return.
   This is usually when the students AGI exceeds $12,000(TY2018), $12,200(TY2019), $12,400(TY2020).
   Note:Taxable Scholarship/Grants are considered earned income for the purpose of determining if a dependent must file a tax return and for calculating the standard deduction for dependents. Taxable scholarships and fellowship grants not reported on Form W-2 are considered to be unearned income for the purpose of calculating kiddie tax.[See Pub 4012 Tab A Chart B].
3. One of the following is true
1. The Student is younger than 18
2. The Student is 18 and their earned income (W-2 and Schedule C) is less than 1/2 of their support
3. The Student is between 19 and 23 at the end of the tax year, is a full-time student, and their earned income (W-2 and Schedule C) is less than 1/2 of their support
4. One of the students parent is alive at the end of the tax year.
5. The Student does not file a joint return for the tax year.

Note:If it looks like the Kiddie tax has been triggered, calculate 1/2 of the student's support. Note (3b) and (3c) require that the student's earned income be less that 1/2 of the student's support in order to apply. Also (3c) does not apply if the student is not a full-time student at the end of the year.

Reducing Taxpayer Income -- Only applies if Student is the Taxpayer or Taxpayer's Spouse

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