1098-T form: Child's Scholarships exceeded her tuition

[thechadwells]

I forgot to enter my child's 1098-T form on my taxes. I read the directions and Turbo said to submit an amendment after my taxes were accepted and processed.  I am doing that. However, when it says that she will have to claim part of her scholarships as income because her scholarships were larger than her tuition. She doesn't have receipts for everything and she is living at home while going to a University. I tried to input the 1098-T information on her taxes, but Turbo won't let me update it. Suggestions? 

When I did my amendment on my taxes ,it said she would have to claim the difference.

I tried to "explore on my own' as suggested and it still won't let me change in the information from $0. What do I do? 

Thank you.  Johanna Chadwell

[JotikaT2]

It depends.

It sounds like you are trying to amend your tax return because you forgot to include your daughter's tuition costs in your tax return. 

If this is correct, is your daughter claimed as a dependent on your tax return?  If so, you will need to claim the 1098-T tuition on your tax return, not hers.

To enter your 1098-T information: 

1. Go to the Federal section of the program 
2. Select "Deductions & Credits" 
3. Select "Expenses and Scholarships (Form 1098-T)" and click start 

Continue through the screens and answer the questions as applicable.

When you see Your Education Expenses Summary, select Edit to the right of your name.  You will see the following screen: 

If you need to make any adjustments, use the screens as circled above to make your adjustments.

In regards to your daughter, any scholarship income that exceeded the amount of the qualified education expenses would be considered taxable income.

Scholarships are taxable if used for the following items: 

Room & board 

Travel & incidental expenses 

Any fees, books & supplies not required for classes 

Scholarships are not taxable if used at an eligible school for a degree if: 

Tuition & fees 

Fees, books, supplies needed for classes 

Scholarship or fellowship for services from: 

National Health Services Corps Scholarship Program 

Armed Forces Health Professions Scholarship & Financial Assistance program 

However, she would also need to meet the filing threshold requirement.  If the amount of her excess scholarship income does not exceed the filing thresholds, she may not even have a filing requirement.

Please see the following link for more information on her possible filing requirement.

Filing requirements for dependents

If her income is below the amounts listed in the link above, she does not need to file a tax return.

[Hal_Al]

The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or deduction or possibly your student has taxable scholarship income. 

What are the actual numbers, in boxes 1 and 5,  on the 1098-T? Does she have any other income and from what source (wages, interest, etc.)

 Simply stated, if the difference between box 5 and box 1 is less than $12,200 and she has no other income, she does not need to file a tax return.

It sounds like you didn't claim a tuition credit on your tax return.  There is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, the parents  (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.

Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return. 

Note: the $6000 is still less that the $12,200 filing requirement. So, you can claim the tuition credit and she still doesn't have to file (some tax experts recommend she file anyway to document the loop hole).