My daughter is my dependent and a full time college student.She is paying for college. She earned $6,000 last year and will be filing a tax return. Who enters her 1098-T?

[drewbru]

I read this in a post about filing the 1098-T:
"the STUDENT did NOT provide more that 50% of the STUDENT’S support (schollarships/grants received by the student ***do not count*** as the student providing their own support)"
https://ttlc.intuit.com/questions/2617488-who-enters-the-1098-t-on-their-return-my-son-or-me-parent

I thought that meant providing more than 50% of the college costs. Now I'm not sure if that means normal support (as in being a dependent or not) or if it is referring to college support.

Since she is responsible for paying for what is not covered by scholarships, I thought she would have to include the 1098-T on her return.

Box 2: 54,106
Box 5: 63,332 

She only has to pay for some additional room and board which is awesome! But who has to pay tax on that additional amount (Box 5 - Box 2)?

[DanielV01 · Accepted solution]

She enters taxable income generated by the 1098-T, whereas you enter qualifying education expenses for the purpose of American Opportunity or Lifetime Learning Credit.  

She will claim the excess (and taxable) scholarship income on her tax return no matter what.  Because scholarship income is considered to be unearned income, your daughter will be filing Form 8615, because that amount of income will be taxed at your marginal rate instead of her rate. (On the surface, roughly 9,000 of taxable scholarship will be reported on her return).

Now, since she is your dependent, only you can claim any Education Credits (if you choose to do so).  However, for you to claim any Education Credits, she will need to claim additional taxable scholarship.  (For you to claim 2,500 of American Opportunity Credit, she would need to claim an additional 4,000 of scholarship.  You will need to determine if the extra amount she will pay in tax will be worth you being able to claim the AOC, if your income allows you to do so).