Q. Should I ask the college to explain this to me?
A. Maybe.
Q. Or is the explanation obvious?
A. No, it's not obvious, but one common situation might explain it. The school posted the 2022 tuition on the 2021 1098-T, because it's billed in December but didn't post the scholarship until January.
Here's a post on the five main points on the 1098-T:
https://ttlc.intuit.com/community/college-education/discussion/i-need-help-with-1098t-section-colleg...
In addition, point #6: the American Opportunity Credit (AOC) can only be claimed 4 times. 2022 is most likely the student's 5th year of college, so the parents (or student if not a dependent) is probably not eligible for the AOC. He can still claim the Lifetime Learning Credit (LLC) if some tuition was actually paid (even by scholarship - see "loop hole" at link). It takes $10K of tuition & fees (books & computer don't count for the LLC) to get the max $2000 LLC.
Point #7: Can the student be claimed as a dependent in the Graduation year? (answer written as if the parent asked the question)
If he/she was a student (under 24) for at least 5 months and lived with you for more than half the year, and did not provide more than 1/2 his own support for the whole year, you can still claim him. Be sure he knows you're claiming him, so he doesn't claim himself. He can only be claimed once. But, he can "file taxes" without claiming his own exemption.
The real question is who should be claiming him in this "transition" year to adulthood. You two have to agree on who is going to claim his exemption. Each should do their taxes both ways and see which way the family comes out best. Even then, you have to meet the rules.
There are two types of dependents, "Qualifying Children"(QC) and Other ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test. Only a QC qualifies a taxpayer for the Earned Income Credit.
The rule is that a child of a taxpayer can still be a “Qualifying Child” dependent, regardless of his income, if:
- he is a full-time student under 24 for at least 5 calendar months of the year (graduating in May usually means you meet the 5 month rule)
- he did not provide more than 1/2 his own support (scholarships are considered 3rd party support and not support provided by the student).
- lived with the parent (including time away at school) for more than half the year
So, it usually hinges on "Did he provide more than 1/2 his own support in 2024.
The support value of the home you provided is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants. IRS Publication 501 on page 20 has a worksheet that can be used to help with the support calculation. See: http://www.irs.gov/pub/irs-pdf/p501.pdf (page 15)
If he has already filed one way, he can file an amended return, going the other way.
