I claimed my daughter as dependent on my taxes using her 1098T. Now they are saying she has to file for an amount the for what she got back from her grant, I don't remember the amount and how do that and why would she have to , did i answer a question incorrect
This is common. When you entered the 1098-T, in TurboTax (TT), while doing your return, it calculated that you do not qualify for a tuition credit.
In addition, it determined that your daughter has taxable scholarship income that needs to be reported on her tax return. If you don't remember the amount (or can't find it), it doesn't matter. Just enter the 1098-T, on your daughter's return (even though you already entered it on your return**). TT will re-calculate the taxable portion, on her return.
** TT ended up not using any of the 1098-T info on your return.
BUT
There is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, the parents (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship. You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.
Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 2. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.
You can both use the 1098-T to enter the expenses. If you claim the tuition credit, you do need to report that you got one (the TurboTax interview will handle this) Your daughter should use the 1098-T because it makes entering scholarship income go smoother.
You'll have to use a workaround in TurboTax. Change the numbers at the 1098-T entry screen. Using the above example; you enter $8000 in box 1 and $4000 in box 5. On her return, your daughter enters $8000 in box 1 and $14,000 in box 5.
Who is "they" ("they are saying she has to file "), the school or did you get a letter from the IRS or?
Typically the taxable portion of a grant is the difference between box 5 and box 1 (or box 2), if the amount in box 5 is the larger amount.
How did you "use her 1098-T"? Normally you can only claim a credit if box 1 is larger than box 5.
Box 1 is smaller and turbo message was from turbo when I was leaving out section.
The school said that I had to file that 1098t form eith my taxes
This is common. When you entered the 1098-T, in TurboTax (TT), while doing your return, it calculated that you do not qualify for a tuition credit.
In addition, it determined that your daughter has taxable scholarship income that needs to be reported on her tax return. If you don't remember the amount (or can't find it), it doesn't matter. Just enter the 1098-T, on your daughter's return (even though you already entered it on your return**). TT will re-calculate the taxable portion, on her return.
** TT ended up not using any of the 1098-T info on your return.
BUT
There is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, the parents (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship. You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.
Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 2. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.
You can both use the 1098-T to enter the expenses. If you claim the tuition credit, you do need to report that you got one (the TurboTax interview will handle this) Your daughter should use the 1098-T because it makes entering scholarship income go smoother.
You'll have to use a workaround in TurboTax. Change the numbers at the 1098-T entry screen. Using the above example; you enter $8000 in box 1 and $4000 in box 5. On her return, your daughter enters $8000 in box 1 and $14,000 in box 5.