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Eli923
Level 2

Dependent college student 1098-T

My 21 year old daughter is taking student loans to pay her grad school tuition. So although we are contributing to her financially in general, she is paying for school. She's also not earning enough (~$12k) to file taxes. Since she's not benefiting from the large tuition amounts on the 1098-T, are we allowed to?

5 Replies
MinhT1
Expert Alumni

Dependent college student 1098-T

As she is under age 24, if she is a full time student, you can claim her as your dependent if she does not provide more than half of her own support.

 

If you claim her as a dependent, you can claim her education expenses on her 1098-T to have education credits. 

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Eli923
Level 2

Dependent college student 1098-T

Does "support" include tuition, or only living expenses?

Eli923
Level 2

Dependent college student 1098-T

Also, when claiming her as a dependent, do I need to report her W-2s on my tax return?

DawnC
Expert Alumni

Dependent college student 1098-T

Yes, it includes tuition and education expenses.   Support is generally defined as what you spend on a person's food, lodging, clothing, education (including the GI bill), medical and dental care (including insurance and supplementary Medicare premiums), recreation, transportation and similar necessities.

 

Support does not include:

 - Life insurance premiums

 - Funeral expenses

 - Federal, state, or local income taxes or Social Security and Medicare taxes paid on a person's own income

 - Scholarship grants

 - Survivors' and Dependents' Educational Assistance payments used for support of child who receives them

 

We asked you this question because based on your age, you might qualify for an education tax break called the American Opportunity credit.   Think about the people who helped pay for your living expenses. Did anyone pay for your rent or food? Consider all your living expenses and what you contributed. If you paid for more than half with your earned income, you supported yourself.  

 

If a parent or someone else paid for more than half of your living expenses, you did not support yourself. If you used unearned income or student loans to pay for most of your expenses, you did not support yourself.

 

If you're in the military, your housing allowance counts as your income. If you paid for most of your living expenses with your income and housing allowance, you supported yourself.

 

And NO - do not report her wages on your tax return.   She will file her own tax return and indicate that she can be claimed as a dependent on someone else's return (if you are claiming her as a dependent on your tax return).  

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Hal_Al
Level 15

Dependent college student 1098-T

If you co-signed the loans, the loans do not count as self support by the student.  If they are only in her name, then it is support she provided.

 

A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:

  1. He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled
  2. He did not provide more than 1/2 his own support. Scholarships are considered third party support and not as support provided by the student.
  3. He lived with the parent (including temporary absences such as away at school) for more than half the year

 

So, it doesn't matter how much he earned. What matters is how much he spent on support. Money he put into savings does not count as support he spent on him self.

The support value of the home, provided by the parent, is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants.

The IRS has a worksheet that can be used to help with the support calculation. See: http://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf

 

You may only claim the tuition credit if you claim her as a dependent, regardless of how much of the tuition you actually pay.

 

 

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