Q.1. Does my dependent need to file a tax return to report the 1098-T since the parent is claiming the Education credit?
A. 1. No, since his total income is below the $14,600 filing requirement.* But you may want to have him file, anyway, just to document reporting of the scholarship as income (I'm not aware of any IRS guidance on that issue).
Q. 2. Form 8962 is asking for Dependents' Modified AGI. Do i need to include this on line 2b of form 8962?
A. 2. I'm not knowledgeable on that topic, but my reading of the form 8962 instructions indicate that you do NOT include his MAGI, because he is not a dependent "who is required to file an income tax return because their income meets the income tax return filing threshold".
*Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $14,600 filing requirement and the dependent standard deduction calculation (earned income + $450). It is not earned income for the kiddie tax and other purposes (e.g. EIC).
