1098-T

[psfrazer1]

My daughter Graduated College in 2020. She is doing her masters in 5. The last four years I have entered her 1098-T on my return. This year she did all of her financial aide herself and i did not borrow federal  loans. I did borrow and entered her 1098-T for the 2019 year. My daughter turned 21 in 2019, bust still is living at home and am still supporting her. she did work and earned $7070.00 Does she claim her 1098-T on her taxes this year? or do I ?

[Hal_Al]

You claim the 1098-T, if she is still your dependent.  If not, she claims it.

The dependency issue is in question.  You say she did all of her financial aide herself but she  is living at home and you am still supporting her.

A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:

1. He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled
2. He did not provide more than 1/2 his own support. Scholarships are considered third party support and not as support provided by the student.
3. He lived with the parent (including temporary absences such as away at school) for more than half the year

So, it doesn't matter how much he earned. What matters is how much he spent on support. Money he put into savings does not count as support he spent on him self. Student loans that were not co-signed by the parent are considered self support by the student.

The support value of the home, provided by the parent, is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants.

The IRS has a worksheet that can be used to help with the support calculation. See: http://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf

Furthermore, there is a rule that says IF somebody else CAN claim him as a dependent, he is not allowed to claim himself. If he has sufficient income (usually more than $12,400), he can & should still file taxes. In TurboTax, he indicates that somebody else can claim him as a dependent, at the personal information section.  TT will check that box on form 1040.

Even if he had less, he is allowed to file if he needs to get back income tax withholding. He cannot get back social security or Medicare tax withholding.

[RayW7]

You cannot claim the American Opportunity Tax Credit “if you’re claimed as a dependent on another person’s tax return, such as your parent’s tax return,” according to the IRS. The same applies to the Lifetime Learning credit.

Rules for Claiming a Dependent-

• Are they a citizen or resident? The person must be a U.S. citizen, a U.S. national, U.S. resident, or a resident of Canada or Mexico. Many people wonder if they can claim a foreign-exchange student who temporarily lives with them. The answer is maybe, but only if they meet this requirement.
• Are you the only person claiming them as a dependent? You can’t claim someone who takes a personal exemption for himself or claims another dependent on his own tax form.
• Are they filing a joint return? You cannot claim someone who is married and files a joint tax return. Say you support your married teenaged son: If he files a joint return with his spouse, you can’t claim him as a dependent.

In addition to the qualifications above, to claim an exemption for your child, you must be able to answer "yes" to all of the following questions.

• Are they related to you? The child can be your son, daughter, stepchild, eligible foster child, brother, sister, half brother, half sister, stepbrother, stepsister, adopted child or an offspring of any of them.
• Do they meet the age requirement? Your child must be under age 19 or, if a full-time student, under age 24. There is no age limit if your child is permanently and totally disabled.
• Do they live with you? Your child must live with you for more than half the year, but several exceptions apply.
• Do you financially support them? Your child may have a job, but that job cannot provide more than half of her support.
• Are you the only person claiming them? This requirement commonly applies to children of divorced parents. Here you must use the “tie breaker rules,” which are found in IRS Publication 501. These rules establish income, parentage and residency requirements for claiming a child.

[LinaJ2020]

When you borrowed loan to pay for her expenses, you are considered as paying it.  If you qualify to claim her on your taxes, you got to claim the education tax break.  See Can I claim her?

Per IRS, 

If your daughter paid and if you claim her as an exemption on your tax return, you would treat any expenses paid (or deemed paid) by her as if you had paid them.  You will get the credit / deduction.

If you paid and if you claim her as an exemption, only you can include any expenses you paid to claim the benefit.  If neither you nor anyone else claims an exemption for the dependent, only the dependent ( your daughter ) can include any expenses you paid to claim the credit.

If you do not claim your daughter as dependent, only your daughter can claim the benefit on his tax return. 

For more information, click here: https://www.irs.gov/pub/irs-pdf/p970.pdf ( read under Who Can Claim a Dependent's Expenses?)

@psfrazer1