Independent Tax status not putting 1098T on my tax return

[Raahul123]

I am a 22 year old filing as independent on my tax return. I graduated in 2021 and I did not put my 1098T form on my tax return since that goes on my parents return right? My parents said they would get fined since I didn't put it on mine but the account owner is them. Am I correct in saying that as long as the 1098T is reported on their tax return no fine penalties will be incurred on them?

[PattiF]

The 1098-T should be on your tax return since you are no longer a dependent. I don't know if anyone will be fined for this. You can use Form 1098-T on your return to possibly have an education credit that will reduce the taxes owed or give a larger refund.

If the parent is claiming the student as a dependent on their (the parents) income tax return, then the parent enters the 1098-T Tuition form on their (the parents) income tax return.

Before you enter the 1098-T form, here's some important info you need to know:

• If the student on the 1098-T is your dependent, enter the 1098-T on your return, even if your dependent paid the tuition.
• If the student on the 1098-T is you, and you're not being claimed as a dependent, enter the 1098-T on your return unless your employer paid for or reimbursed your tuition (in which case, just keep the 1098-T with your tax records).

[Raahul123]

So on my tax return I have to click the option of "someone else can claim me as a dependent" and yes to the questions that "this person will claim me on their 2021 tax return" ? or do they not have to claim me.

[Hal_Al]

The 1098-T can go on either the parents return or the students return or even both. The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return or your parent's.  However receipt of a 1098-T frequently means you (or your parents) are either eligible for a tuition credit or possibly the student has taxable scholarship income. 

Nobody gets fined for not reporting a 1098-T.  You may get in trouble with the IRS for not reporting taxable scholarship or claiming a credit you're not entitled to.  

You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. If you (or your parents) claim the tuition credit, you do need to report that you got one (the TurboTax interview will handle this).

You say your parents are "the account owner".   If there was a 529 Plan or ESA distribution, they may need to report the expenses on the 1098-T on their return to offset the distribution. 

Provide more detail about what's going on and we may be able to provide more specific guidance. 

What makes you think you are allowed to file as an independent.  Most 22 year old full time students are not independent for tax filing purposes.  Filing independent is not optional. You either qualify as a dependent or you don't. 

[JillS56]

It depends.   Your parents do not have to claim you and they also do not have to report the 1098-T.   This is a reporting document to let you know your tuition and scholarship expenses.  You would only report it if you want to get the education credit.  

If your parent claims you on their taxes then they report the 1098-T and you answer the questions appropriately.   If you are filing and are claiming yourself, then you report the 1098-T.  

[Raahul123]

I have graduated in May 2021 but have gotten a job after that and have paid for my expenses, so that is why I returned as Independent, should I be filing as dependent?

[Hal_Al]

Q.  Should I be filing as dependent?

A. Maybe.

Graduation year (written as if the parent asked the question)

If he/she was a student (under 24) for at least 5 months and lived with you for more than half the year, and did not provide more than 1/2 his own support for the whole year, you can still claim him. Be sure he knows you're claiming him, so he doesn't claim himself. He can only be claimed once. But, he can "file taxes" without claiming his own exemption.

The real question is who should be claiming him in this "transition" year to adulthood. You two have to agree on who is going to claim his exemption. Each should do their taxes both ways and see which way the family comes out best.  Even then, you have to meet the rules. The rule is that a child of a taxpayer can still be a “Qualifying Child” dependent, regardless of  his income, if:

1. he is a full time student under 24 for at least 5 calendar months of the year (graduating in May usually means you meet the 5 month rule)
2. he did not provide more than 1/2 his own support  (scholarships are considered 3rd party support and not support provided by the student). 
3. lived with the parent (including time away at school) for more than half the year

So, it usually hinges on  "Did he provide more than 1/2 his own support in 2021.

The support value of the home you provided is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants. IRS Publication 501 on page 20 has a worksheet that can be used to help with the support calculation. See: http://www.irs.gov/pub/irs-pdf/p501.pdf  (page 15)

If he has already filed one way, he can file an amended return, going the other way.