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jeffplank
New Member

My son recieved a 1098 T form, do I use it for my tax return?

My dependent son received a substitute 1098-T form from his college. This is all scholarships or grant money. How do I or where do I put this in my tax return? There is no Box 1. Also the amount in box 2 is different than box 5, do I subtract them to get the amount that is for room and board?
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Accepted Solutions
Carl
Level 15

My son recieved a 1098 T form, do I use it for my tax return?

Enter the 1098-T information exactly as it's printed on the 1098-T.

Here’s the general rules gisted from IRS Publication 970 at http://www.irs.gov/pub/irs-pdf/p970.pdf

If the student:

Is under the age of 24 and:

Is enrolled in an undergraduate program at an accredited institution and

the STUDENT provides LESS THAN 50% of the STUDENT'S own support. (schollarships/grants received by the student do not count as the student providing their own support)

Then:

The parents will claim the student as a dependent on the parent's tax return and:

The parents will claim all schollarships, grants, tuition payments, and the student's 1098-T on the parent's tax return and:

The parents will claim all educational tax credits that qualify.

If the student will be filing a tax return and:

The parents qualify to claim the student as a dependent, then:

The student must select the option for "I can be claimed on someone else's return", on the student's tax return. The student must select this option ieven f the parent's qualify to claim the student as a dependent, and the parents do not claim them.

Now here’s some additional information that may or may not affect who files the 1098-T. If the amount of scholarships/grants exceeds the amount of qualified education expenses, the parent will know this when reporting the education on their tax return, because the parent will not qualify for any of the tax credits. (They only qualify for tax credits based on out-of-pocket qualified expenses not covered by scholarships/grants.)  Also, the parent’s will not qualify for the credits depending on their MAGI which is different for each credit, and depends on the marital status of the parent or parents.

In the case where scholarships/grants covers “all” qualified education expenses, the parent’s don’t need to report educational information on their dependent student at all – but they still claim the student as a dependent if they “qualify” to claim the student.

 If the scholarships/grants exceed the qualified education expenses, then the student will report the 1098-T and all other educational expenses and scholarships/grants on the student’s tax return. The student will pay taxes on the amount of scholarships/grants that are not used for qualified education expenses.However, if the student’s earned income, when added to the excess scholarships/grants does NOT exceed $6100, then the student doesn’t even need to file a tax return, and nothing has to be reported.

View solution in original post

6 Replies
Carl
Level 15

My son recieved a 1098 T form, do I use it for my tax return?

Enter the 1098-T information exactly as it's printed on the 1098-T.

Here’s the general rules gisted from IRS Publication 970 at http://www.irs.gov/pub/irs-pdf/p970.pdf

If the student:

Is under the age of 24 and:

Is enrolled in an undergraduate program at an accredited institution and

the STUDENT provides LESS THAN 50% of the STUDENT'S own support. (schollarships/grants received by the student do not count as the student providing their own support)

Then:

The parents will claim the student as a dependent on the parent's tax return and:

The parents will claim all schollarships, grants, tuition payments, and the student's 1098-T on the parent's tax return and:

The parents will claim all educational tax credits that qualify.

If the student will be filing a tax return and:

The parents qualify to claim the student as a dependent, then:

The student must select the option for "I can be claimed on someone else's return", on the student's tax return. The student must select this option ieven f the parent's qualify to claim the student as a dependent, and the parents do not claim them.

Now here’s some additional information that may or may not affect who files the 1098-T. If the amount of scholarships/grants exceeds the amount of qualified education expenses, the parent will know this when reporting the education on their tax return, because the parent will not qualify for any of the tax credits. (They only qualify for tax credits based on out-of-pocket qualified expenses not covered by scholarships/grants.)  Also, the parent’s will not qualify for the credits depending on their MAGI which is different for each credit, and depends on the marital status of the parent or parents.

In the case where scholarships/grants covers “all” qualified education expenses, the parent’s don’t need to report educational information on their dependent student at all – but they still claim the student as a dependent if they “qualify” to claim the student.

 If the scholarships/grants exceed the qualified education expenses, then the student will report the 1098-T and all other educational expenses and scholarships/grants on the student’s tax return. The student will pay taxes on the amount of scholarships/grants that are not used for qualified education expenses.However, if the student’s earned income, when added to the excess scholarships/grants does NOT exceed $6100, then the student doesn’t even need to file a tax return, and nothing has to be reported.

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kristasanders
New Member

My son recieved a 1098 T form, do I use it for my tax return?

Does it matter if the 1098-T is specifically in the child's name?
Carl
Level 15

My son recieved a 1098 T form, do I use it for my tax return?

The 1098-T will *always* be in the student's name. If that student is your qualified dependent, then it's not an issue.
Carl
Level 15

My son recieved a 1098 T form, do I use it for my tax return?

But on the federal taxes, (I can't speak for state), here's how things are applied.
Scholarships/grants are applied to "qualified" education expenses first. (room and board is not a qualified education expense)
Once scholarships/grants are exhausted, then if there is an "qualified" expenses left to be paid, Coverdell/529 plan money (reported on 1099-Q) is applied "first" to the remaining qualified education expenses.
If there is any Coverdell/529 monies left, it is applied to the "authorized" unqualified expenses - namely room an board.
If scholarships/grants exceed "qualified" expenses, the excess is taxed. Scholarships/grants can not be applied to anything outside of the qualified education expenses. The only qualified education expenses are tuition, books, and lab fees. That's it. Here's a scenario.
Tuition, books, lab fees billed to student for $5000
Room and board billed at $5000
Student receives $6000 in scholarships/grants
Student receives $3000 from a Coverdell/529 plan reported on a 1099-Q
IN the end, $1000 of the scholarship/grant money is taxed
$3000 of the 529 plan is applied to room and board and is NOT taxed.
The remaining $2000 for room and board is paid by the student, because the student has a part time job and the student used that money the student earned to pay it with. So in addition to the $1000 taxable scholarships money, the student will also be taxed on the $2000 they paid for room and board.
parents still qualify to claim the student as a dependent, since the student DID NOT provide MORE than 50% of the STUDENT's support.
So parent's claim student as dependent, and student will file tax return, claim all scholarships, grants, 529/Coverdell monies, the 1099-Q, the 1099-T, and the student will pay taxes on the excess scholarship money (and excess 1099-Q money if there is any excess).
bdicty
Level 2

My son recieved a 1098 T form, do I use it for my tax return?

What do you mean "So parent's claim student as dependent, and student will file tax return". Isn't this a contradiction - when you claim a student on parents tax return, why would the student have to file a tax return? 

Carl
Level 15

My son recieved a 1098 T form, do I use it for my tax return?

why would the student have to file a tax return?

If the student has "reportable" income then the student is required to file a tax return. it does not matter if the student is claimed as a dependent or not, on another tax return. 

The student's income is reportable if:

 - the student's earned income when added to excess scholarships income exceeds $12,300 or

 - If the student has more than $1,150 of investment income.

Keep in mind that just because the income is reportable, does not mean it's taxable. But those are the reporting requirements.

 

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