Does box 5 on 1098t affect adjusted gross income? Is that box taxable?

[Hal_Al]

Q. : Does box 5 on 1098-T affect adjusted gross income?

A. Maybe

Q. Is that box taxable?

A. Maybe

If the amount in  box 5 exceeds the amount  box 1, the difference is potentially taxable to the student (not the parent).

But, the difference may be reduced by other qualified expenses, tuition and fees not shown in box 1, books and other course materials. 

[NCperson]

Box 1 can only include "tuition and related fees" 

from publication 970: 

"qualified education expenses are tuition and certain related expenses required for enrollment or attendance at an eligible educational institution.  

Related expenses. Student activity fees are included in qualified education expenses only if the fees must be paid to the institution as a condition of enrollment or attendance.  However, expenses for books, supplies, and equipment needed for a course of study are included in qualified  education expenses whether or not the the materials are purchased from the educational institution.
 

so for example, if the book(s) or computer wasn't required for a class, it can't be included.  My suggestion is for anything you add to Box 1, be able to support the requirement (e.g. syllabus would be a good supporting document) if the IRS were ever to come knocking. 

[kirstenkeefe10]

So in my situation I graduated May 2019 as was a full time student through then. I am now using turbo tax to file my own return and have $9,000 in my box 5 on 1098 T but my parents paid $9,400 in tuition and fees for me through May 2019.  So should I be able to include the $9,400 in tuition they paid as a deduction?  and if so i am trying to find in turbo tax where to put that information

[NCperson]

nope - doesn't work that way.  you can't deduct what they paid. 

please confirm that $9400 is in Box 1. 

can your parents still claim you as a dependent in 2019?  did they provide over 50% of your support?  How old are you?  How much you earned is immaterial to whether you CAN BE a dependent of theirs... if they can , it maybe more advantageous for them to put the 1098T on their tax return, 

[kirstenkeefe10]

I am 22 years old. I made $27,302 at the job I got out of college. Box 1 only has $190 in it.  Box 5 has $9,000.  They did actually support me through Sept.  in order for me to use my income to pay down student loans.......so they basically gave me a 9-1-19 cut off date for cutting me off their "payroll".....which basically they meant their support.  My parents have not filed their return yet. 

[Hal_Al]

Graduation year  (written for the parent's asking the question)

If he/she was a student (under 24) for at least 5 months and lived with you for more than half the year, and did not provide more than 1/2 his own support for the whole year, you can still claim him. Be sure he knows you're claiming him, so he doesn't claim himself. He can only be claimed once. But, he can "file taxes" without claiming his own exemption.

The real question is who should be claiming him in this "transition" year to adulthood. You two have to agree on who is going to claim his exemption. Each should do their taxes both ways and see which way the family comes out best.  Even then, you have to meet the rules. The rule is that a child of a taxpayer can still be a “Qualifying Child” dependent, regardless of  his income, if:

1. he is a full time student under 24 for at least 5 calendar months of the year (graduating in May usually means you meet the 5 month rule)
2. he did not provide more than 1/2 his own support  (scholarships are considered 3rd party support and not support provided by the student). 
3. lived with the parent (including time away at school) for more than half the year

So, it usually hinges on  "Did he provide more than 1/2 his own support in 2019.

The support value of the home you provided is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants. IRS Publication 501 on page 20 has a worksheet that can be used to help with the support calculation. See: http://www.irs.gov/pub/irs-pdf/p501.pdf

[Hal_Al]

It's complicated. 

In general, if you had $9000 of scholarship and your parents paid $9000 in tuition, it's a wash and you have nothing to report. You do not need to enter the 1098-T. 

But, if you're asking if you can use their $9400 for a tuition credit or deduction; the answer is yes, but you still have to do something with the $9000 of scholarship. 

Did your parents already claim the American Opportunity credit (AOC) 4 times for your previous college years? College usually involves 5 calendar/tax years and you (and/or your parents) are only allowed the AOC 4 times.  There is a less generous credit that can still be claimed.

Why did the $9400 your parents paid not show in box 1 of the 1098-T? Did they pay it in December 2018?  If so, you definitely cannot claim it.