My daughter is a college student who has no earned income.
She has no need to file a tax return, unless she received a refund from the college for unused scholarships/grants in excess of $12,550.
She is a dependent of mine to support the college expense. She received a 1098-T from the university for tuition. Does she has to file for tax return?
No. Since she qualifies as your dependent, you the parent report the 1098-T and all college expenses on your (the parent's) tax return.
We as parents paid her room & board using 529 fund and received 1099-Q this year.
Understand that there is no requirement for the parents to provide the student any support. Not a single penny. The support requirement is on the student, and is as follows:
If the student did not provide more than 50% of their own support for the entire tax year, then the parents qualify to claim the student as a dependent on the parent's tax return.
There are only two possible ways the student can provide more than half of their own support.
1) The student was self-employed or had a W-2 job and earned/was paid a sufficient amount to justify their claim to providing more than half of their own support. The amount earned/paid must be at least $1 more than the total of all other 3rd party income received by the student during the tax year. (scholarships, grants, 529 distributions, money from parents, gift from Aunt Mary, etc., are all 3rd party income and do not count for the student providing their own support.)
2) The student was the primary borrower on a qualified student loan and a sufficient amount was distributed to the student during the tax year to justify a claim to providing more than half of their own support. The amount distributed must be at least $1 more then the total of all 3rd party income received by the student during the tax year.
As for the 1099-Q, if every single penny was used for qualified education expenses and the allowed support expenses, then it doesn't have to be reported on any tax return. Otherwise, it gets reported on the tax return of the person whose SSN is listed on the 1099-Q. Then, it's only required if the recipient's total taxable income (including any potential 1099-Q funds) exceeds their standard deduction.
