Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
ravindrana
New Member

Problem with TurboTax Deluxe. My daughter has a 1098-t that shows that the tution was paid with scholarships. But TurboTax calculates Lifetime Learning Credit. Why?

 
1 Best answer

Accepted Solutions
KrisD
Intuit Alumni

Problem with TurboTax Deluxe. My daughter has a 1098-t that shows that the tution was paid with scholarships. But TurboTax calculates Lifetime Learning Credit. Why?

After you enter all the tax documents on your daughter's return, go back to the "Education Section"

Click Federal

Click Deductions & Credits

Scroll down to "Education" and click open Expenses and Scholarships (Form 1098-T)

Click Edit next to the student's name

This takes you to the "Here's Your Education Summary" page

Click Continue at the bottom of this page

This takes you to "Your education Expenses Summary" page

Click Continue at the bottom of this page

On the next screen, click "Maximize My Education Tax Break" at the bottom of the page

Continue until you see the results

The program will use the education expenses towards a credit and claim scholarship as income if the tax on the additional income is less than the credit. 

You can change this by typing    letme    into the search box and then clicking the "Jump to letme" link 

On the page that opens, you can change, or opt out of, any education credit you are eligible for. You can see how each change impacts the return. 


As an additional note, in your situation, be aware that the 34,000 is only counted towards her support (and whether you claim her) if it was paid to her for services she performed. If the Fellowship was an award, it does not count towards her support. 

According to the IRS:

"Earned income. Earned income includes wages, salaries, professional fees, and other payments received for personal services actually performed. Earned income includes the part of any scholarship or fellowship grant that represents payment for teaching, research, or other services performed by the student that are required as a condition for receiving the scholarship or fellowship grant. Earned income doesn't include that part of the compensation for personal services rendered to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered.

If you are a sole proprietor or a partner in a trade or business in which both personal services and capital are material income-producing factors, earned income also includes a reasonable allowance for compensation for personal services, but not more than 30% of your share of the net profits from that trade or business (after subtracting the deduction for one-half of self-employment tax). However, if capital isn't an income-producing factor and your personal services produced the business income, the 30% limit doesn't apply.

Support. Your support includes food, shelter, clothing, medical and dental care, education, and the like. Generally, the amount of the item of support will be the amount of expenses incurred by the one furnishing such item. If the item of support is in the form of property or lodging, measure the amount of such item of support by its fair market value. However, a scholarship received by you isn't considered support if you are a full-time student. See Pub. 501 for details."

View solution in original post

11 Replies
KrisD
Intuit Alumni

Problem with TurboTax Deluxe. My daughter has a 1098-t that shows that the tution was paid with scholarships. But TurboTax calculates Lifetime Learning Credit. Why?

Does it also calculate taxable income for the student? Is Box 1 larger than Box 5?
ravindrana
New Member

Problem with TurboTax Deluxe. My daughter has a 1098-t that shows that the tution was paid with scholarships. But TurboTax calculates Lifetime Learning Credit. Why?

No. Box 1 is less than Box 5. But in addition she gets a fellowship for boarding and lodging which is taxable income.
KrisD
Intuit Alumni

Problem with TurboTax Deluxe. My daughter has a 1098-t that shows that the tution was paid with scholarships. But TurboTax calculates Lifetime Learning Credit. Why?

Please switch to Forms mode and look at Part VI on the Student Info Wk to see how the program is allocating the 1098-T.
ravindrana
New Member

Problem with TurboTax Deluxe. My daughter has a 1098-t that shows that the tution was paid with scholarships. But TurboTax calculates Lifetime Learning Credit. Why?

I cannot find anything different from what is given in 1098-T. Is there something that I should check?
KrisD
Intuit Alumni

Problem with TurboTax Deluxe. My daughter has a 1098-t that shows that the tution was paid with scholarships. But TurboTax calculates Lifetime Learning Credit. Why?

Is there an amount on Part VI line 17 on the Student Info Wk?
ravindrana
New Member

Problem with TurboTax Deluxe. My daughter has a 1098-t that shows that the tution was paid with scholarships. But TurboTax calculates Lifetime Learning Credit. Why?

No
KrisD
Intuit Alumni

Problem with TurboTax Deluxe. My daughter has a 1098-t that shows that the tution was paid with scholarships. But TurboTax calculates Lifetime Learning Credit. Why?

Are you working on your return and is the student your dependent? Do you have a credit listed on line 50 of your Schedule 3?
ravindrana
New Member

Problem with TurboTax Deluxe. My daughter has a 1098-t that shows that the tution was paid with scholarships. But TurboTax calculates Lifetime Learning Credit. Why?

She is not a dependent because she got $34000 for room and board in 2018 as NSF fellowship
KrisD
Intuit Alumni

Problem with TurboTax Deluxe. My daughter has a 1098-t that shows that the tution was paid with scholarships. But TurboTax calculates Lifetime Learning Credit. Why?

Did you add the fellowship to the return yet?
ravindrana
New Member

Problem with TurboTax Deluxe. My daughter has a 1098-t that shows that the tution was paid with scholarships. But TurboTax calculates Lifetime Learning Credit. Why?

Yes. It still calculates the Lifetime Learning Credit.
KrisD
Intuit Alumni

Problem with TurboTax Deluxe. My daughter has a 1098-t that shows that the tution was paid with scholarships. But TurboTax calculates Lifetime Learning Credit. Why?

After you enter all the tax documents on your daughter's return, go back to the "Education Section"

Click Federal

Click Deductions & Credits

Scroll down to "Education" and click open Expenses and Scholarships (Form 1098-T)

Click Edit next to the student's name

This takes you to the "Here's Your Education Summary" page

Click Continue at the bottom of this page

This takes you to "Your education Expenses Summary" page

Click Continue at the bottom of this page

On the next screen, click "Maximize My Education Tax Break" at the bottom of the page

Continue until you see the results

The program will use the education expenses towards a credit and claim scholarship as income if the tax on the additional income is less than the credit. 

You can change this by typing    letme    into the search box and then clicking the "Jump to letme" link 

On the page that opens, you can change, or opt out of, any education credit you are eligible for. You can see how each change impacts the return. 


As an additional note, in your situation, be aware that the 34,000 is only counted towards her support (and whether you claim her) if it was paid to her for services she performed. If the Fellowship was an award, it does not count towards her support. 

According to the IRS:

"Earned income. Earned income includes wages, salaries, professional fees, and other payments received for personal services actually performed. Earned income includes the part of any scholarship or fellowship grant that represents payment for teaching, research, or other services performed by the student that are required as a condition for receiving the scholarship or fellowship grant. Earned income doesn't include that part of the compensation for personal services rendered to a corporation which represents a distribution of earnings or profits rather than a reasonable allowance as compensation for the personal services actually rendered.

If you are a sole proprietor or a partner in a trade or business in which both personal services and capital are material income-producing factors, earned income also includes a reasonable allowance for compensation for personal services, but not more than 30% of your share of the net profits from that trade or business (after subtracting the deduction for one-half of self-employment tax). However, if capital isn't an income-producing factor and your personal services produced the business income, the 30% limit doesn't apply.

Support. Your support includes food, shelter, clothing, medical and dental care, education, and the like. Generally, the amount of the item of support will be the amount of expenses incurred by the one furnishing such item. If the item of support is in the form of property or lodging, measure the amount of such item of support by its fair market value. However, a scholarship received by you isn't considered support if you are a full-time student. See Pub. 501 for details."

View solution in original post

Dynamic AdsDynamic Ads
Privacy Settings
v