Entered the 1098 T for scholarship and tuition. Should only have the net of that as income. All scholarship as income, why? Claimed on parents return

[KrisD15]

It depends on how your parents claimed it. 

The could have had you claim part of the scholarship and then use the expenses for a credit. The credit they get is usually more than the tax you'll have to pay.

If this is from the instructions they received from TurboTax, that is probably what happened. 

Check to see if they got an education credit on their return.  

[NCperson]

WHOA - 

maybe I am not following

if Box 5 exceeds Box 1 on the 1099-T, then the form is to be submitted on the STUDENT's taxes - not the PARENTS.... that assumes the parent is claiming the student as a dependent. 

the net of the two numbers is taxable income to the STUDENT (and presumably has little to no income, so may not result in any tax)

[NCperson]

@KrisD15  - not following your advice, the taxpayer is suggesting that Box 5 exceeds Box 1 (because he used the word 'income') ....if that occurs, there is no other credit available as the scholarship (Box 5) covered all the tuition expense (box 1) and you can't double dip and use the same dollar of expense for two purposes.... 

[KrisD15]

The Taxpayer is saying that he has more scholarship than tuition paid on his 1098-T.

Let say 4,000 tuition, 5,000 scholarship. 

He is saying he expects to pay tax on the net difference (1,000) but he says he is paying the entire scholarship amount (5000)

Yes, that is possible if the parents took 4,000 expenses for the American Opportunity Tax Credit, the student needs to claim the 5,000 scholarship as income. (there are no expenses left to apply to the scholarship) 

No, you can't double dip, that's why the parents enter the 1098-T into their program so the program can do the math. 

Yes, you can allocate scholarships to tuition (making them tax free) or to other expenses like room and board which means the expenses can be used for a credit and the student claims the scholarship amount used for room and board. 

@NCperson

[NCperson]

@KrisD15 

<<Yes, that is possible if the parents took 4,000 expenses for the American Opportunity Tax Credit, the student needs to claim the $5,000 scholarship as income. (there are no expenses left to apply to the scholarship).

How is that possible?  aren't all the deductible expenses are in Box 1 of the Form 1098-T (other than some "required" books and labs).  What is NOT in Box 1 of Form 1098-T that could be claimed for the AOC or lifetime learning credit?   

<<No, you can't double dip, that's why the parents enter the 1098-T into their program so the program can do the math.>>

if Box 5 exceeds Box 1 and the student is a dependent the Parents are NOT to enter the 1099-T of THEIR return; it goes on the students return and in this example the $1000 is income.  In fact, using your example, there is NO impact on the parent's tax return if the numbers in your example are keyed into TT (I tested it to confirm).,

the person asking this question is doing something wrong in the answering the critical questions that TT is asking. Once that is fixed, the taxable component will be $1,000.

Form 1098-T is confusing, but this is how it works to my understanding:

1) if the student is a dependent, the PARENT files the 1098-T,  UNLESS Box 5 exceeds Box 1 then the STUDENT files the 1098-T and is liable for the taxes on the difference.  

2) if the student is NOT a dependent, the STUDENT files the 1098-T under all circumstances. 

[KrisD15]

@NCperson

If the scholarship is not restricted, it can be allocated to Room and Board expenses.