Q. Can someone tell me how to enter taxable scholarship income? Should it be in Parents account or my child account?
A. Taxable scholarship is reported on the student's tax return.
Even though the parent has entered the student's 1098-T, on their return, to claim the tuition credit, the student also enters the 1098-T on his return.
Enter the 1098-T, exactly as received, on the student's return. Enter book and computer expenses separately. In his interview, you should eventually reach a screen called "Amount used to calculate education credit" (or similar wording). Be sure the amount in that box is $4000.* That will put all his excess scholarship as income on his return (line 8r of Schedule 1).
Be advised some people are saying they're not getting the "Amount used to claim the tuition credit" (or “Education Expenses used for a Tax Credit”) screen on the dependent’s interview. Check the student information work sheet (part VI, line 17) to verify it was entered. If not, the alternate workaround is to enter $4000 less than the actual box 1 amount, when you enter the 1098-T.
There's yet another (and simplest) work around. Manually calculate the taxable amount of taxable scholarship and enter the 1098-T, on his return, with 0 in box 1 and the taxable amount in box 5. In that case the amount in the "Amount used to claim the tuition credit" box is 0 (if it comes up).
Before doing that, it may be helpful to first delete the previously entered 1098-T and start over, so that there's not conflicting data still hanging around.
*$4000 is the maximum amount of expenses needed to get the maximum American Opportunity credit (AOC). The AOC is generally not available to grad students.
