Daughter is a college dorm RA, received W-2 and 1098-T which does not show room and board or stipend, do I need to worry about it?

[Hal_Al]

@abcdefghijk - None of the 1099-Q is taxable, since the room and board alone exceed the distribution amount.

I assume you want to use $4000 of expenses to claim the American Opportunity Credit. That leaves  $677  (4521 + 156 - 4000 = 677) of qualified expenses to be covered by scholarship.  So, the taxable amount of SCH is $13,490 (14167- 677 = 13490).

[NCperson]

a couple of questions....

1) what is the number in BOX 1 of Form 1098-T? 

2) is she a dependent for tax purposes on anyone's tax return (probably yours?)

3) what are her college expenses (please list them out; tuition, room and board, required books, non-required books, etc.)

4) what is in BOX 1 and BOX 2 of form 1099-Q?

5) on the 1099-Q, whose social security number is on it - yours or hers? 

also, her standard deduction is not necessarily 12,200 if she is a dependent.  Some of here income is earned (6400) but the rest appears to be unearned. 

For 2019, the standard deduction amount for an individual who may be claimed as a dependent by another taxpayer cannot exceed the greater of $1,100 or the sum of $350 and the individual's earned income (not to exceed the regular standard deduction amount).

[Hal_Al]

@ccchlfields  Student wages at tax exempt colleges are usually exempt from FICA tax.  For whatever reason, her college has determined that $4900 of her $6400 was not exempt. You'll have to ask them why. It probably has something to do with where she worked and on what.

MI and IN have a recprocal agreement on wages. She does not need to file a MI return.   "A general rule of thumb is to file Indiana state taxes if your income is $1,000 or more. When it doubt, it is best to file". https://www.in.gov/dor/4731.htm

  Box is $445.  What Box?

  1099Q Box is $6700.  What's in boxes 1, 2 and 3 of the 1099-Q? Whose name and SS# are on the 1099-Q? It may be you that files it, not her. 

1098T Box 5 is $22636.  What's in box 1? How much did she pay for room & board? Books?

Q. Does this mean she has to file a tax return because $6400+$6700=$13,100>$12,200?

A.  No.  But with the rest of the numbers, she may still need to file, but unlikely.  If the $445 is box 2 of the W-2, she will want to file to get that refunded.  In general, the difference between box 5 and box 1, on the 1098-T, is usually taxable (the amount that box 5 exceeds box 1)

[NCperson]

for clarity @Hal_Al's statement that  "In general, the difference between box 1 and box 5, on the 1098-T, is usually taxable."

In general, when Box 5 exceeds Box 1, on the 1098-T, is usually taxable......(it's not taxable the other way around) 😉

[ccchlfields]

Box 2 on W2 is $445.

1099Q Box 1 $17560 Box 2 $6710, Box 3 $10800 Child's name and SSN

1098T Box 1 $35200

[NCperson]

@ccchlfields 

2) is she a dependent for tax purposes on anyone's tax return (probably yours?)

3) what are her college expenses (please list them out; tuition, room and board, required books, non-required books, etc.)

one more - did the payments from the 529 go directly to the college or to your daughter? 

answers to these questions will impact the response you get..... they make a difference.

[abcdefghijk]

2- yes she is a dependent- 

3-

what are her college expenses (please list them out; tuition, room and board, required books, non-required books, etc.)

tuition $3728, 

fees- $793 (#3728 plus $793= 4521 which is box 1) 

room and board- $6740.41

Required books- $156.35

Non required books- $0

payments from 529 went directly to the college- 

one more - did the payments from the 529 go directly to the college or to your daughter? 

1098-T Box 1 $4521 Box 5- $14176

1099-Q Box 1 $3728 Box 2 $1944.53 box 3 $1783.47

thank you for your help

[ccchlfields]

Why did i get this response?   Where do I file state taxes?

My 19 yr old child has permanent residence in IN.  She goes to college and worked for college in MI.  W2 did not take out state taxes in either state.  Where does she file state taxes IN or MI?

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 1 Reply

 MinhT1

Employee Tax Expert

41m ago

 

Your child has a tax home in IN, but has income in MI. She'll need to file a non-resident tax return in MI.

[#9]

My 19 yr old child has permanent residence in IN.  She goes to college and worked for college in MI.  W2 did not take out state taxes in either state.  Where does she file state taxes IN or MI?

[MinhT1]

Your child has a tax home in IN, but has income in MI. She'll need to file a non-resident tax return in MI.

[NCperson]

well, this got quite confusing because @abcdefghijk answered questions that were intended for @ccchlfields 

@abcdefghijk - please do not answer anymore; I think you got your answer , right? 

@ccchlfields..... @Hal_Al  answered your question about the state taxes ... see below

MI and IN have a recprocal agreement on wages. She does not need to file a MI return.   "A general rule of thumb is to file Indiana state taxes if your income is $1,000 or more. When it doubt, it is best to file". https://www.in.gov/dor/4731.htm

then you asked, 

1099Q Box is $6700.  1098T Box 5 is $22636.  Does this mean she has to file a tax return because $6400+$6700=$13,100>$12,200?

and i asked a number of questions: 

1) what is the number in BOX 1 of Form 1098-T? $37200 (box 5 is $22, 636)

2) is she a dependent for tax purposes on anyone's tax return (probably yours?)

3) what are her college expenses (please list them out; tuition, room and board, required books, non-required books, etc.)

4) what is in BOX 1 and BOX 2 of form 1099-Q? Box 1 $17560 Box 2 $6710,

5) on the 1099-Q, whose social security number is on it - yours or hers? her's

I am going to assume that the answer to #2 is that she is your dependent

since Box 1 exceeds Box 5 of the 1098-T, it has no tax impact.  the difference is  $14,564

The 1099Q is $17560 less the $14564 leaves $2,966.  As long as there are an additional $2966 in expenses that were NOT in Box 1 of form 1098-T then there is no tax impact.  And presumably there were additional expenses because the payment went directly to the college to pay the outstanding bill. 

the answer is she had to file a tax return IN ORDER TO GET BACK THE $445 of federal tax withholdings - that is the only reason.  (her standard deduction is the $6400 + 350). 

@Hal_Al  - can you please weigh in as you are more qualified than me on this topic? 

[Hal_Al]

@ccchlfields  @NCperson  Room and board are qualifying expenses for a 529 distribution.  Assuming she has at least $2966 in room and board (even if she lives at home), none of her scholarship or 1099-Q is taxable, as both are covered by enough qualified expenses. 

She only needs to file a return to get her $445 withholding back.  She should not enter either the 1098-T or 1099-Q, in Turbotax. Both are only informational documents and do not have to be reported. Entering them is only going to get confusing.  We already know they are not taxable. 

[Hal_Al]

@ccchlfields  You didn't ask about claiming a Tuition credit.  If your daughter has at least $6966 (4000 + 2966) of room and board and/or ther qualifying expenses*, you can claim the American Opportunity Credit (AOC), without making any of the 529 plan distribution taxable. $4000 is the maximim amout of expenses needed to claim the maximum AOC ($2500 credit).  This assumes you are otherwise qualified (income under $180,000 married).

Even without additional expenses, you can still claim the AOC, by making some of the 529 plan taxable**.  You will come out ahead using this technique.

*Room and board are not qualifying expenses for the AOC. But using the 529 plan to cover R&B frees up tuition to be claimed for the AOC.

**

Total qualified expenses (including room & board) less amounts paid by scholarship less amounts used to claim the Tuition credit equals the amount you can use to claim the earnings exclusion on the 1099-Q. 
Example:
  $10,000 in educational expenses(including room & board)

   -$3000 paid by tax free scholarship

   -$4000 used to claim the American Opportunity credit

 =$3000 Can be used against the 1099-Q (usually on the student’s return)

Box 1 of the 1099-Q is $5000

Box 2 is $600

3000/5000=60% of the earnings are tax free

60%x600= $360

She has $240 of taxable income (600-360)