The 1098-T causes a lot of confusion, but is really quite simple:
- If a parent claims the child as their dependent, the parent will claim the 1098-T and education expenses, regardless who paid.
- If the parent does not claim the child as their dependent, the student will claim the 1098-T and education expenses, regardless who paid.
- If the scholarships, grants, and other aid (except loans) is more than the tuition, fees, books, and supplies, the student will claim the 1098-T and education expenses, and will claim the excess aid as taxable income.
Your situation is a bit more complicated, because of the summer tuition. Was that summer payment included on the 1098-T? If so, it has already been factored in and there is nothing else to claim or report.
In some situations, a student is allowed to allocate scholarships to living expenses (rather than tuition, fees, and course materials) and can then use amounts paid out of pocket to qualify for education credits. However, this depends upon the restrictions of the scholarship.
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