Question

Advanced Scenario 1: Aiden Smith
Interview Notes
• Aiden is 19 years old, unmarried, and was a first-year full-time student working on a
degree in accounting during 2018. He has never had a felony drug conviction.
• Aiden did not provide more than half of his own support and can be claimed as a
dependent by his mother.
• Aiden’s income was $4,000 in wages working as a part-time cook at a fast food
restaurant.
• Aiden received Form 1098-T indicating $5,000 for payments received for qualified
tuition and related expenses in Box 1. He received $8,500 in scholarships and
grants, which was reported in Box 5.
• Aiden’s scholarship was used to pay for room and board, tuition, and books. The
cost of his books was $845.
• Aiden is a U.S. citizen with a valid Social Security number.

Advanced Scenario 1: Retest Questions
1. Aiden’s scholarship is NOT taxable and does NOT need to be reported on his tax
return.
a. True
b. False
2. Which of the following is NOT a qualified education expense?
a. Tuition
b. Books
c. Room and board
d. Lab fees required for enrollment

Advanced Scenario 2: Sean Yale
Interview Notes
• Sean is 49 and his divorce became final on October 21, 2018. He pays all the cost
of keeping up his home in the United States. He earned $38,000 in wages in 2018.
• Sean’s daughter, Sonya, lived with Sean all year. She is 18, single, and had $4,000
in wages in 2018.
• Sonya’s son, Jimmy, was born on November 17, 2018. Jimmy lived in Sean’s home
all year.
• Sean provides more than half of the support for both Sonya and Jimmy.
• Sean, Sonya, and Jimmy are all U.S. citizens with valid Social Security numbers.

Advanced Scenario 2: Test Questions
3. Sean is able to claim the credit for other dependents for Sonya.
a. True
b. False
4. Who can Sean claim as a qualifying child(ren) for the earned income credit?
a. Sean has no qualifying children.
b. Sean can claim Jimmy, but not Sonya.
c. Sean can claim Sonya, but not Jimmy.
d. Sean can claim both Sonya and Jimmy.
5. Which of the following statements is true?
a. Sean must file Married Filing Separately because he was not considered single
for the entire year.
b. Sonya and Jimmy are qualifying persons for Sean to file Head of Household.
c. Sean has to file Single.
d. Sean can choose to file a joint return with his ex-wife because his divorce was
not final until October 21, 2018.

Answer 1

Scenario 1

1--False, explained below

Scholarships that are received are generally tax free in case

1. The scholarship is used for paying the fees, books, supplies and for purchase of equipment required for the course.
2. If you are candidate of for a degree at an educational institute that maintains a regular faculty and curriculum

However the scholarship is not tax free if it is used to pay incidental charges such as

1. Room and board
2. Travel
3. Purchase of optional equipment’s

Since the scholarship is used to pay for room and board, tuition, and books. Only the book cost can be tax free and the remaining scholarship is to be reported.

2--Room and board are not the qualified education expenses as these are considered to be of incidental nature by IRS.

_______________________________________________________________________________________________

Scenario 2: Sean Yale

1--True, as there is only one child on the list for whom the credit is being sought.

2-----Sean can claim both of the child as he is providing more than half of the support to Sonya. Jimmy being under 13 is already on the child credit list.

3------Marital status at the end of the year is to be considered for the tax. The marital status on 31 Dec is to be considered.

Sean can file as head of the family as he had custody of the children.