1098-T came to student but parent makes the payment, can I claim

If you are entering them as dependents on your tax return then you can enter the Form 1098-T on your return.

If you are claiming your kids as dependents then the education credit goes on YOUR tax return.

 

https://ttlc.intuit.com/questions/1901172-what-are-education-tax-credits

 

They can be claimed as dependents if they are under the age of 24 and attending school full-time.

 

 

WHO CAN I CLAIM AS A DEPENDENT?

 

You can claim a child, relative, friend, or fiancé (etc.) as a dependent on your 2023 taxes as long as they meet the following requirements:

Qualifying child

• They're related to you.
• They aren't claimed as a dependent by someone else.
• They're a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.
• They aren’t filing a joint return with their spouse.
• They're under the age of 19 (or 24 for full-time students).
• No age limit for permanently and totally disabled children.
• They lived with you for more than half the year (exceptions apply).
• They didn't provide more than half of their own support for the year.

Qualifying relative

• They don't have to be related to you (despite the name).
• They aren't claimed as a dependent by someone else.
• They're a U.S. citizen, resident alien, national, or a Canadian or Mexican resident.
• They aren’t filing a joint return with their spouse.
• They lived with you the entire year (exceptions apply).
• They made less than $4,700 in 2023.
• You provided more than half of their financial support.

Q. Can I claim my daughter's 1098-Ts on my taxes?

A. Yes.

 

But, it's not because they are not filing taxes. And it's not because you paid the tuition.  It's because you are claiming them as dependents.  As such, you get to claim the tuition credit. 

 

You didn't ask, but be aware that there is even  a tax “loop hole” available, if the student is on scholarship. The student reports all his scholarship, up to the amount needed to claim the American Opportunity Credit (AOC), 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 1. 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.

Books and computers are also qualifying expenses for the AOC. So, extending the example, the student had another $1000 in expenses for those course materials, paid out of pocket, she would only need to report $5000 of taxable scholarship income, instead of $6000.

Form 1098-T can result in one of two things, 

an education credit if more expense's were paid than aid received OR

Taxable income if more aid was received than tuition paid

 

Since you claim the students, if there is a credit, you get the credit and if there is taxable income, the students file and claim that income.

 

You can enter the 1098-T into your TurboTax program and the program will tell you if you get a credit and/or if the students need to claim scholarship  income. 

 

IRS PUB 970 

 

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