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My son received grants for junior college and worked part time. Do I have to do a certain form when filing his taxes

 
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2 Replies
Hal_Al
Level 15

My son received grants for junior college and worked part time. Do I have to do a certain form when filing his taxes

No. The standard forms are used. Taxable scholarship (if any) must go on line 8r of schedule 1. TurboTax will do that if the scholarship is entered in the educational expenses (Form 1098-T) section, not the income section.  

 

  Here's a post on the five main points on form 1098-T:

https://ttlc.intuit.com/community/college-education/discussion/re-what-do-i-do-with-form-1098t/01/37...

AmyC
Expert Alumni

My son received grants for junior college and worked part time. Do I have to do a certain form when filing his taxes

It depends:

Most grants - like Pell grants, are tax free when used for tuition but not when spent on non-education items - like room and board

Taxable grant income is reported as income

If he is not claimed by you, he may qualify for education credit, Form 8863 by including his 1098-T.

 

On your tax return, you may qualify to claim the education credit, if your son is your dependent. Normally parents claim students through college as support matters, not income. If so, you would file the 1098-T and 8863 education credit on your return. In order to maximize the credit, some of your son's grant may need to be taxable. Big refund for you and little to no income tax for him.

 

Education income and expenses are a very complicated area when done right. 

Each year:

  1. Verify you can claim your student or do a quick run through of Whom May I Claim as a Dependent?
  2. If claiming, , check to see if you qualify for any college credits. Currently:
    • For the full credit, your MAGI (modified adjusted gross income) is less than $80,000 ($160,000 if you're filing jointly)
    • For a reduced credit, your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you're filing jointly)
    • There is no credit given if your MAGI is above $90,000 ($180,000 if you’re filing jointly)
  3. If you :
  • qualify to claim education credit, your goal is $4,000 spent on tuition for maximum credit. The IRS allows juggling numbers. We can dig into your situation to figure out the best method for you and your student.
    • Qualified Education Expenses - Internal Revenue Service: Enter the 1098-T with $4,000 tuition and zero scholarship to get the program to easily give the correct credit. The 1098-T is informational and need not be entered as received. You don't need to enter anything  for expenses.
    • On student return: Enter the 1098-T with the remainder of the tuition (after the $4,000 you took out) and enter the full scholarship amount.  Enter additional expenses, books, other required expenses. There may or may not be a small tax liability.
  • don't qualify: No credit  on your return. However, you may need to include the Kiddie Tax. If the scholarship (and other unearned) income is over $2,700 for TY25, determine if this must be reported as  kiddie tax -see What is the Kiddie Tax?

 

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