What if Im filing taxes independently for the first time, but my parents are paying for college and I have a 1098 T form that shows my name? Is this unreported income?

[nicole_tax_]

I am unsure of what to do. As it’s not ME paying this tuition, but rather my parents. And by filing independently I mean doing my taxes on my own.

[Hal_Al]

Q.  My parents are paying for college and I have a 1098 T form that shows my name? Is this unreported income?

A. That is not income and you do not report it as income on your tax return.  

Although the general rule, in taxes, is that you must be the one making the payment, to get the deduction or credit, there is an exception for education. You may claim the tuition credit based on the tuition and other qualified expenses paid by you or your parents or even grandma. 

In addition, you parents do not have to report a gift because it's for education ( gifts over a certain amount usually require the filing of an IRS form, Form 709.  

[Hal_Al]

The question you didn't ask is: are you allowed to file independently and what does independently mean.

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 parts of 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

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 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

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 $13,850), 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.

https://ttlc.intuit.com/community/dependents/help/when-do-i-have-to-answer-yes-to-being-claimed-as-a...

With the tax law change, effective 2018, most students will get the same refund whether they claim themselves or not. The personal exemption has been eliminated and the standard deduction increased. However, you only qualify for an education credit or deduction, if you are not a dependent