1098-T Form - Enter on Parent or Student's Return

[rorodgers16]

I am doing my own taxes and using the 'Walk through guide" in turbo tax.

Do I enter the information from form 1098-T on both my tax return and my student's tax return?  

The "walk through guide" is asking for the same information on both of our returns.

Parent Filing: Head of Household with Dependent

Student Filing: Single as a Dependent

Thank you!

[SharonD007]

Report the 1098-T on your tax return as long as your student qualifies as your dependent along with their educational information.  Your student can't report the 1098-T on their tax return since you are claiming them as a dependent. You may also qualify for the Lifetime Learning Credit or the American Opportunity Tax Credit. 

Review the TurboTax articles Guide to Tax Form 1098-T: Tuition Statement and What Are Education Tax Credits? For additional information.

Make sure she checks the box indicating that someone else will claim her as a dependent.  ‌ Refer to the TurboTax article: How do I indicate that I can be claimed as a dependent on someone else's return?

[rorodgers16]

Thank you!

I have the student as a dependent on the parent's return. And the student has checked the box that he/she can be claimed as a dependent.

Just to clarify, I should just bypass that section (Education) on the student's return even though Turbo Tax is walking me through and asking the same questions?

[DavidD66]

Yes, you can just bypass or click through the Education section on your dependent's tax return.  

[Hal_Al]

Q. Just to clarify, I should just bypass that section (Education) on the student's return even though Turbo Tax is walking me through and asking the same questions?

A. Yes, most likely.

The 1098-T is only an informational document. The numbers on it are not required to be entered onto your, or the student's tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit and/or possibly your student has taxable scholarship income.  If neither is true, don't enter the 1098-T.

If you claim the tuition credit, you do need to report that you got one. 

You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T.  It is possible, that both of you could need to enter the 1098-T, if you are claiming the credit and he needs to report some of the scholarship as income. 

In a case where box  5 (scholarships) of the 1098-T is larger than box 1 (tuition), the parent can still claim a tuition credit, if the student declares some of his scholarship taxable. Then both of you would enter the 1098-T, with adjustments.  See below the line for details.

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There is a tax “loop hole” available. 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 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.