I’m the parent and my children received there 1098-T form from the college but I still claim them as dependents. Since the 1098 form came the the students name do I use it on my taxes as a parent

[Sam Hopi]

MY SON, 22,  HAS A W-2 WITH WAGES $13200 AND SCHORSHIP TAXBLE IS $6600. SINCE HE IS UNDER 24 AND FULL-TIME STUDENT CAN BE AS A QUALIFING CHILD OR OTHER DEPENDENT IN MY RETURN FOR EITC? 

I THINK HE SHOULD FILE HIS RETURN BUT I WOULD LIKE TO KNOW WITH HIS EARNED INCOME AND TAXABLE SCHOLARSHIP (SCHOLARSHIP EXCEEDS THE TUITION) IS HE CHILD OR OTHER DEPENDET FOR EITC PART?

[KrisD15]

Yes, as a student under 24 he very well could be your dependent.

If this is the case, the student must file a tax return as a dependent which MIGHT cause him to owe a little more in tax, but your credit might be more than the increase in tax that the student owes. 

The main issue is if the student provided more than half of his own support, in which case he would NOT be a dependent. 

Since you mention that he had college costs, that expense counts as part of his needed support, HOWEVER the Scholarship income does not count. 

So whatever scholarships covered is support HE DID NOT PROVIDE HIMSELF. 

If he put any money into savings, that does not count as him providing his own support. 

As a student, you can still count housing you provide even if he is away at school if he is ONLY away to attend school and intends to return home. 

You can add all his expenses and only subtract what he paid with his onw EARNED INCOME (no scholarships or gifts). If his EARNED INCOME did not pay for more than half his expenses, he is a Dependent. 

Click here for a support worksheet

According to the IRS:

“Qualified education expenses paid by a dependent you claim on your tax return, or by a third party for that dependent, are considered paid by you.”

Pub 970

@Sam Hopi 

[Hal_Al]

As others have said, as long as he did not provide more than half his own support, he can still be your Qualifying Child (QC) dependent for the EITC.  You will only get the Other dependent Credit ($500) instead of the child tax credit, since he is over 16.  But, he is still a QC for purposes of the EITC. Scholarships, including the  $6600 taxable part, are not considered support provided by him, for the support test.

He does need to file a tax return and will owe about $800 of federal tax.  The scholarship income is considered unearned income and the "kiddie tax" will apply (a portion of the income will be taxed at the parent's marginal tax rate. 

[prospectom]

I noticed in the response if the "excess scholarships/grants does NOT exceed $12,350 for the 2019 tax year, then the student doesn't even need to file a tax return, and nothing has to be reported."  

Our dependent daughter received a grant for 2023, and we as parents, did not qualify for the 1098-T tax credit, and our daughter has no other income.  Has the $12,350 limited changed sine 2019?  Is there an easy form with Turbotax our daughter can fill out, if necessary?

Thank you.

[MarilynG1]

If you daughter received scholarship/grant funds that exceed all of her qualified education expenses, then she could report the excess as taxable income on her own return.

However, if she is not required to file a return, then no, it does not get reported.  

Here's more info on Taxable Scholarships. 

Unfortunately, she would need to file a standard Form 1040 if she is required to file.  There is no longer any 'short form'. 

To get the taxable scholarship reported on her return, she should enter the 1098-T  and education expenses in her return.  The excess scholarship income will then be reported properly on Form 1040. 

[Hal_Al]

Q. Has the $12,350 limited changed sine 2019? 

A. $13850 for 2023.

[ajnsue]

This is the best explanation I've seen. Thank you for taking the time to explain the IRS code in regular language! 

[ajnsue]

I wanted to point out a possible error in the explanation, at least the way I'm reading it.  For the sentence, about whether a dependent needs to file their own taxes, you explained if their investment income  " exceeds $ 1050", they do not need to file.  But it should be if their investment income is under $1050.  

Still a great explanation. 

[MANI1346]

Thanks, I am confused for this part, Support , if my son have a W-2 around $22000 and Had 18 units in a year, can say he is full-time student an $22000 is not too much for part of support?

[Hal_Al]

Q. If my son have a W-2 around $22000 and Had 18 units in a year, can say he is full-time student?

A. The school defines what "full time" is. Yo have to ask them.  12 units per term is the usual for full time.

Q. Is $22000 is not too much for part of support?

A. If he is full time and a QC dependent, 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 himself.

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

There are two types of dependents, "Qualifying Children"(QC) and Other ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test.

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 excluded from the support calculation
3. He lived with the parent (including temporary absences such as away at school) for more than half the year