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TONYAKIZZIA
Returning Member

1098T

I claim my son as a dependent. He has some taxable income from his scholarship because a small portion was used to pay his room and board.  Do we enter  the 1098 T form on both of our taxes?

6 Replies
SusanY1
Expert Alumni

1098T

No. Since he has taxable scholarship income, enter it only ion his tax return.   There will not be expenses to claim any credits on yours this year so it won't be necessary to enter it there.   Congratulations on his achievements!

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Hal_Al
Level 15

1098T

Maybe. First, the 1098-T is only any 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.  

 

You say he has a small amount of taxable scholarship. If that is his only income, or he has less than $12,200* of total income; he does not need to file a  tax return and the simplest thing is to just not enter the 1098-T, on either return.

 

But,  there is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, 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 has $2000 of taxable income and nobody can claim the American opportunity credit. But if he reports $6000 as income on his return, the parents can claim $4000 of qualified expenses on their return. In this case, you do want the student to file a tax return, to document that he reported the scholarship as income.

 

You can both use the 1098-T to enter the expenses. If you claim the tuition credit, you do need to report that you got one (the TurboTax interview will handle this) Your son should use the 1098-T because it makes entering scholarship income go smoother.

 

*If your student has investment income of more than $350, and total income of more than $1100, the reporting requirement is different

h-petrovs
Level 2

1098T

Hi.  My son who I claim as a dependent is a full time student and has received a 1098T for 3 years.  In 2017 and 2018 I included it in my return.  He graduated in May 2019 and his 1098T for 2019 has approximately $300 more in scholarship than tuition.  TT is telling me that my son should recognize the income on his return.  Since I have included it in my return in prior years shouldn't I do so this year as well?  And if so how do I get it into income in TT?

Thanks, Diana 

VictorW9
Expert Alumni

1098T

Does he have any other income other than the extra $300 of scholarship money? If not, then he will be below the filing threshold. If he has any federal taxes taken out, then he may worth his while filing a tax return and you can still take the credit.

 

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h-petrovs
Level 2

1098T

Thank you for your response Victor.  Yes he has about 14k for the Air Force reserves so I am filing a return for him.  I don't understand why I can't include the income on my return since I have been putting it on there for other years.  Do you know if there is some rule that says if it is net taxable income it needs to go on the student's return rather than the parents?  The other reason why I want to keep it on my return is that in the first year 2017 they put about 5k in tuition in box 1 and then didn't have any of the related scholarship income, which was about 4500.  I made that adjustment on 2017 and recognized the 4500.  Then it finally caught up on the 1098 this year when the tuition is 2100 but the reported scholarships is 6600 and I am making the adjustment of the 4500 on the return to show it relates to prior year tuition.  If they look at my returns for 2017 they will see that number adjusted in as income so they can make the match.  It won't show all that on my son's return.  But maybe I don't need to be concerned about that.  What do you think?  I guess I could force that number on my return for $300.  Ugh...not much money but could cause problems.

Diana 

VictorW9
Expert Alumni

1098T

Have you included other expenses for books, equipment and the like. I am sure you can find an extra $300 spent on those ancillary cost to eliminate the $300. You will have to find the extra educational costs anyway to make the AOTC be beneficial to you. 

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