Both of my children file separately but I still claim them both. Do we both enter the 1098-T's on our own taxes? Both have gotten scholarships that pay for all (my daughter) and almost all (my son) of their tuition.
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No. Only one of you can claim the deduction.
If the student:
Is under the age of 24 on Dec 31 of the tax year and:
Is enrolled in an undergraduate program at an accredited institution and:
Is enrolled as a full time student for one academic semester that begins during the tax year, (each institution has their own definition of a half time student) and:
The STUDENT did NOT provide more that 50% of the STUDENT’S support (scholarships/grants received by the student ***do not count*** as the student providing their own support)
Then:
The parents will claim the student as a dependent on the parent's tax return and:
The parents will claim all scholarships, grants, tuition payments, and the student's 1098-T on the parent's tax return and:
The parents will claim all educational tax credits that qualify.
If the student will be filing a tax return and:
The parents qualify to claim the student as a dependent, then:
The student must select the option for "I can be claimed on someone else's return", on the student's tax return. The student must select this option even if the parent's qualify to claim the student as a dependent, and the parents do not claim them.
If the student cannot be your dependent, then they get the education deductions.
No. Only one of you can claim the deduction.
If the student:
Is under the age of 24 on Dec 31 of the tax year and:
Is enrolled in an undergraduate program at an accredited institution and:
Is enrolled as a full time student for one academic semester that begins during the tax year, (each institution has their own definition of a half time student) and:
The STUDENT did NOT provide more that 50% of the STUDENT’S support (scholarships/grants received by the student ***do not count*** as the student providing their own support)
Then:
The parents will claim the student as a dependent on the parent's tax return and:
The parents will claim all scholarships, grants, tuition payments, and the student's 1098-T on the parent's tax return and:
The parents will claim all educational tax credits that qualify.
If the student will be filing a tax return and:
The parents qualify to claim the student as a dependent, then:
The student must select the option for "I can be claimed on someone else's return", on the student's tax return. The student must select this option even if the parent's qualify to claim the student as a dependent, and the parents do not claim them.
If the student cannot be your dependent, then they get the education deductions.
I paid for my daughters tuition and living expenses as a full time student in college for 2019. She graduated in May and lived with us until end of September when she got married. When I started my 2019 TurboTax return it determined my daughter was not a dependent since she got married. However, I still paid all of her tuition and expenses to finish out her degree. TurboTax is not letting me enter the tuition portion (box 1) on the 1098-T. It says I already entered that earlier and the amount is $0 which is not correct. How do I at least get to enter tuition costs for 2019? Want to get as much of a deduction as I can.
That is correct. Since she is not your dependent, you cannot claim a tuition deduction or credit for her education.
But, she can claim the credit, even though you paid for it. Being married and filing a joint return, with her spouse, removes the old rule about students, under 24, not being allowed the full credit.
You may be interested in the details at this thread: https://ttlc.intuit.com/community/taxes/discussion/can-i-claim-my-daughter-who-got-married-on-decemb...
If you can claim her as a dependent, then you can claim the education credit
Yes, both of you would enter the information but only you can claim the education deduction if you claim them as dependent.
You children would also fill out 1098T if they file because they may need to pay tax on scholarship money that's towards taxable expenses
if the student is in a graduate program at the university and still lives at home but works part time and has a W2 and will file taxes should the parent file the 1098T
Q. If the student is in a graduate program at the university and still lives at home but works part time and has a W2 and will file taxes should the parent file the 1098T?
A. The parent claims the tuition credit ("files the 1098-T") only if the parent is claiming the student as a dependent.
A better question is: If the student is in a graduate program at the university and still lives at home but works part time and has a W2 and will file taxes, can the parent claim him as a dependent?
There are two types of dependents, "Qualifying Children"(QC) and standard ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test.
A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:
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
Furthermore, there is a rule that says IF somebody else CAN claim him as a dependent, he is not allowed to claim himself. If he has sufficient income (usually more than $12,400), he can & should still file taxes. In TurboTax, he indicates that somebody else can claim him as a dependent, at the personal information section. TT will check that box on form 1040.
Even if he had less, he is allowed to file if he needs to get back income tax withholding. He cannot get back social security or Medicare tax withholding.
See full dependent rules at: https://turbotax.intuit.com/tax-tools/tax-tips/Family/Rules-for-Claiming-a-Dependent-on-Your-Tax-Ret...
I claimed my son as a dependent for my tax return. I received my son's 1098-T from his school, my son also has his own W-2 form to be filed for his own tax return.
My question is - the amount of scholarships & grants is bigger than the amount of payments received for qualified tuition and related expenses on my son's 1098-T, I was advised when I claimed my son as a dependent on my tax return, and I file my son's 1098-T on my tax return, my son don't need to file his 1098-T on his own tax return. Is it correct ? I tried to use H&R Block to file my son's tax return, when I selected my son as a dependent, 1098-T is not allowed to be filed, it on credits portion indicates "1098-T Tuition and expenses for college and other higher education is 0", it shows SORRY YOU CAN'T CLAIM YOUR TUITION after pressing the revisit button since someone is claiming you as a dependent, you can't claim a tuition tax break. Don't worry – we'll continue to look for other credits and deductions as we work through the rest of your return.
I also checked many websites including IRS, they all said excess scholarships & grants are taxable, the student as a dependent still needs to count the excess scholarship & grants as income filed together with W-2 Form on the tax return. Both concepts are totally discrepant
Could anyone explain the details for this BIG issue ? Thanks !
Q. I was advised when I claimed my son as a dependent on my tax return, and I file my son's 1098-T on my tax return, my son don't need to file his 1098-T on his own tax return. Is it correct ?
A. No. That's generally true, but as you surmised, his excess scholarships are taxable income and must be reported. The best way to do that is to enter the 1098-T, on his return, in TurboTax (TT). You do this even if the parent also used the 1098-T on his return.
Q. Since his scholarships are more than tuition and other expenses, does that mean that neither the parent or the student can claim the tuition credit?
A. Usually, yes, but there is a "loop hole" available. See below.
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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, instead of $6000.
The IRS actually encourages use of this technique. From the form 1040 instructions: “You may be able to increase an education credit if the student chooses to include all or part of a Pell grant or certain other scholarships or fellowships in income. For more information, see Pub. 970, the instructions for Form 1040 and IRS.gov/EdCredit". PUB 970 even has examples of how to do the “loop hole”.
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You essentially have to use a work around in TurboTax (TT). Here's how I would do it. Enter the 1098-T, on your return, but only enter $4000 in box 1. No other numbers. You only enter the 1098-T to get TurboTax to check the proper box on form 8863. Lying to TurboTax to get it to do what you want does not constitute lying to the IRS.
Enter the 1098-T, exactly as received, on the student's return. Enter book expenses separately. In his interview, you should eventually reach a screen called "Amount used to calculate education deduction or credit" Be sure the amount in that box is $4000. That will put all his excess scholarship as income on his return.
Be advised some people are saying they're not getting the "Amount used to claim the tuition deduction or credit" screen on the dependent’s interview. Check the student information work sheet (part VI, line 17) to verify it was entered. If not, the alternate workaround is to enter $4000 less than the actual box 1 amount, when you enter the 1098-T.
There's yet another (and simplest) work around. Manually calculate the taxable amount of scholarship and enter the 1098-T, on his return, with 0 in box 1 and the taxable amount in box 5. In that case be sure the amount in the "Amount used to claim the tuition deduction or credit" box is 0.
Why would the parent claim the amount on the 1098-t when the form is in the child/student's name?
@billmcse wrote:
Why would the parent claim the amount on the 1098-t when the form is in the child/student's name?
A dependent cannot claim education expenses on their tax return.
The parent(s), who claims the dependent, could be eligible for the tax credits that the student is not eligible for. @billmcse
This is rather confusing. What if you just don't put in the 1098-T?
In Turbotax when I fill out the 1098-T on my taxes, it specifically tells me that my son has to file a tax return to include the extra money as income. This would necessitate HIM using the 1098-T form as to where the income came from.
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