1098-T necessary to enter?

[DaveZeee]

Hello,

There's already beens some great discussion of this, but, just want to confirm:

If all 529 withdrawals are non-taxable (all used for QEE's) AND my dependent full-time college student's 1098-T's scholarship income was all used for QEE's (Box 1 is greater than Box 5), than I do NOT need to enter either form in TT returns--either on my own return or on my student's?

Also, not claiming the Am. Opportunity Tax Credit because I'm just over the phase-out amount.

Thanks!

[Hal_Al · Accepted solution]

Q. If all 529 withdrawals are non-taxable (all used for QEE's) AND my dependent full-time college student's 1098-T's scholarship income was all used for QEE's (Box 1 is greater than Box 5), then I do NOT need to enter either form in TT returns--either on my own return or on my student's?

A. That's correct, as long as there was no duplication of the QEEs used to make both the scholarship and 529 distribution tax free*. 

*Using two examples: 

Example 1

Box 1 of the 1098-T is $10,000 and other expenses (room, board & books) is $4000.

Total QEE $14,000

Box 5 of 1098-T  $2000 (scholarship)

The 529 distribution is $11,000. 

Nothing is taxable as QEE  ( $14,000) is more than the payment sources(scholarship & 529) ($13,000).

Example 2

Box 1 of the 1098-T is $10,000 and other expenses (room, board & books) is $4000.

Total QEE $14,000

Box 5 of 1098-T  $2000 (scholarship)

The 529 distribution is $13,000. 

 QEE  ($14,000) is less than the total (tax favored) payment sources ($15,000). Something has to get taxed, either $1000 of the  scholarship or a prorated portion of the 529 earnings (box 2 of the 1099-Q)

[DaveZeee]

Awesome! Thanks for the quick reply!