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Deductions & credits
Ok, My situation is this: My Daughter (19 on May 2022) worked for the first 6.5 months to gather some money to help pay for her college. She earned about 16000. After that, she started full time college and she was even able to receive to aid to cover for the tuition. She received a form1098-T and, as far as I understand, she has to file taxes. I am including her as a dependent on my Taxes and I am adding the 1098-t she received. The aid she received cover the all tuition, but is not enough to cover for room and board. Should I include her 1098-T on my tax declaration or it would be better for her to include it on hers?
Now after I read your post it seems like we should both use it.
As per your example:
Using an example: Student has $9,000 in box 5 of the 1098-T and $6500 in box 1. At first glance he/she has $2500 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $3000 of qualified expenses on their return.
Books and computers are also qualifying expenses for the AOC. So, extending the example, the student had another $250 in expenses for those course materials, paid out of pocket, she would only need to report $5000 of taxable scholarship income, instead of $5750.
Also TT ask for room and board, in her case the expenses are 3000$, is that only used as information? I mean, does that has any effect on taxes?
Sorry, I have experience with TT, but this is a first time situation.
Thanks is advance for your help