Since you have the desktop version, switch to Forms (top right hand side) and look at the 8863 and the student worksheet to see what numbers the program is using.
(Online program look at "Preview my 1040")
The 1098-T (and 1099-Q) are informational tax forms use to calculate credits and/or income. As the parent of a dependent student, when you enter the 1098-T on your return, your return will tell you what the student needs to report and how to report it. You do not re-enter the 1098-T on the student's return all over again. Below are directions the dependent student uses to report the income.
Credits are only based on tuition & fees (reported on the 1098-T) and books and supplies (entered by you) ( the AOTC uses all books and supplies, Lifetime Learners Credit only uses books required to be purchased from the school).
Scholarships can be applied to the expenses listed above and therefor be non-taxable, OR to Room & Board which makes that portion taxable. Since you added 600 to the room and board, you could allocate 6936 scholarship to Room & Board if desired. That would make more expenses available towards the credit on your return.
AFTER you work it through on your return (by the way, there are no "my part of his expenses", you group all expenses to the one student, no matter who pays) you report his taxable scholarship income (if any) on his return.
I did a mock up and entered only 493 as expenses, It gave me the American Opportunity Tax Credit and was split as partially non-refundable (lowers tax, goes to 1040 line 12b $296) and partially refundable (any remainder of the credit on 1040 line 17 $197). How the credit affects your return depends on your income and tax liability.
Read IRS Pub 970 for more information and great sample examples. Also, compare the 1098-T to your student's account statement to verify that the school reported everything properly.
CLICK
HERE for IRS Pub 970 Tax Benefits for Education
FOR THE STUDENT TO REPORT THE TAXABLE SCHOLARSHIP INCOME:
- Sign
into your account, your return and click “Pick up where I eft off”
- Click Federal
- Click Wages
& Income
- Scroll
down to “Less Common Income” (THE LAST SECTION) (online click Show more)
- Scroll
down to “Miscellaneous Income, 1099-A, 1099-C”
(THE LAST SECTION) and click
Start
- Scroll down to “Other reportable income” (THE LAST
SECTION) and click Start
- Continue
to the “Other taxable Income Screen” and type SCH as the description and enter the amount
- Click Continue
- If the “Other Miscellaneous Income
Summary” screen looks good, click Done
