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kevelder70
New Member

1098-T taxable scholarship who enters on their taxes?

My daughter has a scholarship that paid for her room and board so the amount is larger than her tuition on the 1098-T.  Do we enter that amount on our taxes (she is a dependent), or does she enter it on her taxes or do we both have to enter the amount?

2 Replies
npierson7
Level 1

1098-T taxable scholarship who enters on their taxes?

Either you or your daughter need to report that income. If she will file her tax return, she will need to indicate there she's a dependent. 

To enter your scholarship income in TurboTax, in your return, go to Federal Taxes, Deductions & Credits, Education and the program will walk you through the information about your scholarship income, to determine what's taxable.

 

Hal_Al
Level 15

1098-T taxable scholarship who enters on their taxes?

If you are claiming the tuition credit, the 1098-T goes on your return.  If she has scholarship income, it goes on her return.  It is possible that you both will enter it. 

 

Neither of you "have to" enter the 1098-T.  The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or deduction or possibly your student has taxable scholarship income.  

If you claim the tuition credit, you do need to report that you got one or that you qualify for an exception (the TurboTax interview will handle this)

You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. Claiming either goes easier in TT, if you use the 1098-T. 

_________________________________________________________________________________________

 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 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. 

 

 

 

 

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