So I am confused on entering 1098T. My child box 1 has 8300 and box five has 19000. My child does not work so has no income. When it comes to the room and board question do we have to add an amount here. I tried to add an amount here 10000 it still did not have me the education credit. Will I really need to include this on my taxes. Also if son did not work and I add amount will he need to file taxes for that amount. This is not helping me at all. Please advise and thank you.
1. Child has no income - not true. Any scholarship income greater than the tuition is income to the child - it is a hybrid income and may involve the Kiddie Tax. See -see What is the Kiddie Tax?
2. Room and board - not necessary for your situation with a 1098-T
3. Education credit - requires you to have paid $4,000 out of pocket for the student.
4. You may want to include it on your taxes but in a different way to get the education credit.
The IRS has a loophole when the scholarship is more than the tuition. You will each need to enter the 1098-T but in different ways
Let's check the boxes:
5. He may need to file. You can quickly run through the IRS quiz Do I Need to File a Tax Return? Once we get this sorted out.
If the parent qualifies for AOTC and claiming dependent:
What you should enter to get the credit.
Enter the 1098-T box 1 $4000 box 5 zero
What the student should enter:
Box 1 amount was $8300 but parent took $4000 this leaves $4300. Student will enter $4300 box 1
Box 5 full scholarship amount of $19000
Look at how your taxes are affected and if the kiddie tax comes into play.
You can change the numbers on student and parent return. The parent max is $4,000 but can be lowered and incrementally raise the student tuition amount.
For example: Parent could claim $3k, then student would only subtract $3k from total paid.
1. Child has no income - not true. Any scholarship income greater than the tuition is income to the child - it is a hybrid income and may involve the Kiddie Tax. See -see What is the Kiddie Tax?
2. Room and board - not necessary for your situation with a 1098-T
3. Education credit - requires you to have paid $4,000 out of pocket for the student.
4. You may want to include it on your taxes but in a different way to get the education credit.
The IRS has a loophole when the scholarship is more than the tuition. You will each need to enter the 1098-T but in different ways
Let's check the boxes:
5. He may need to file. You can quickly run through the IRS quiz Do I Need to File a Tax Return? Once we get this sorted out.
If the parent qualifies for AOTC and claiming dependent:
What you should enter to get the credit.
Enter the 1098-T box 1 $4000 box 5 zero
What the student should enter:
Box 1 amount was $8300 but parent took $4000 this leaves $4300. Student will enter $4300 box 1
Box 5 full scholarship amount of $19000
Look at how your taxes are affected and if the kiddie tax comes into play.
You can change the numbers on student and parent return. The parent max is $4,000 but can be lowered and incrementally raise the student tuition amount.
For example: Parent could claim $3k, then student would only subtract $3k from total paid.
Here's a post on the five main points on the 1098-T:
Several of them probably apply to you.
@AmyC said:
If the parent qualifies for AOTC and claiming dependent:
What you should enter to get the credit.
Enter the 1098-T box 1 $4000 box 5 zero
What the student should enter:
Box 1 amount was $8300 but parent took $4000 this leaves $4300. Student will enter $4300 box 1
Box 5 full scholarship amount of $19000
I concur with that advice. If the student has some book and computer expenses, those can be entered to reduce the taxable amount. But it isn't necessary, in your case, as the current taxable amount $14,700 (19,000 - $4300 = 14,700) is less than the $15,750 filing requirement. Technically, he does not need to file a tax return. Some experts recommend that he do so, anyway, to document the reporting of the taxable scholarship amount that frees up the tuition that allows the parent to claim the tuition credit.