Good morning,
Thanks so much for your help in advance!
My daughter got external scholarship of $5000 and the company that awarded the scholarship sent her 1099-NEC. When she got the check she endorsed it to the university and now it is reflected in her 1098-T. My wife also got 1099-Q(in my wife name) for taking money out of our state 529 plan to pay for her college expense. Also my daughter had internships last summer and got $7200 for it so she will need to file for her own return to get the tax withholding back. Because the $5000 is already in the 1098-T it hurts our chance of getting the American Opportunity Tax Credit, unless I specify that the $5000 is already reported as 1099-MISC (but it is actually 1099-NEC). I claim her as dependent. My wife and I are filing jointly.
So my question is should the 1099-Q go to my return? By the way I put 1098-T to my return.
I saw the following instruction in the below post, For Step 1 below, I don't see a way to specify how much of the scholarship was used for room and board, may be because the scholarship was already in the 1098-T and I don't get to use the 'add the scholarship' step?
After Step 3 below it did not make a difference on the tax, not sure what I did wrong.
The only way I found working is by entering another 1099-NEC with negative 5000 but I am not sure if this is the best way.
below copied from another post
1. add the scholarship at scholarships not shown on the 1098-T. When asked how much of the scholarship was used for room and board, enter $1500 (this gets it to line 8r of schedule 1 where taxable scholarships go). Scholarship used for tuition is usually not taxable. You're only doing this to force an entry onto the tax forms for the IRS to see.
2. Then, report the income as other line 8z, Schedule 1 income (enter in TurboTax at the 1099-NEC screen and identify it as sporadic income).
3. Then enter a line 8z deduction, for the same amount. In TurboTax (TT), enter at:
- Federal Taxes tab
- Wages & Income
Scroll down to:
-Less Common Income
-Misc Income, 1099-A, 1099-C
- On the next screen, choose – Other reportable income - Answer yes to Any other Taxable Income -On the next screen, Enter the number with a minus sign (-) in front. Briefly explain at description. Call it something like "1099-NEC amount reported as scholarship".
this is the similar discussion here but my issue is a bit different, this is where I copied the instructions
https://ttlc.intuit.com/community/taxes/discussion/1099-nec-scholarship/01/2877783/highlight/true#M1...
