Zillions thanks! You are so great!

May I ask you the question if I have some problems upon receiving 1099-T?

Yes, you will enter the 1098-T and all other education information IF YOU ARE CLAIMING THE STUDENT as your dependent. If you are not claiming her, she would enter them. 

If you are claiming  her, you enter the information into your TurboTax program, so that it can make the calculations. Once the calculations are made, the program will tell you if there is a credit available and/or if there is tax due. 

If there is a credit available, that credit will be claimed on your return. 

If there is tax due, for example on a scholarship used for room and board, that tax will be reported on the students return. Your TurboTax program will tell you if the student needs to report taxable income, and if so, how. 

The school should send the 1098-T. It may be mailed to you or your daughter's address, depending on what address the school has on file. 

It might also be available online by looking at her online school account. 

As a last resort, you can call the school and ask for a copy. 

Thank you!

I will claim her as my dependent.

In this case - who is going to report residency scholarship (money which covered room and board),  spending on materials, notebook, books, what is the rule?

Does it mean, that if she is dependent, room and board will be in my tax return, and if she is independent and claim everything by herself, it goes to her tax return?

Or room and board goes to her return in all cases by default?

It is very good to understand in theory, not just blindly follow the TurboTax, program I love very much, but also wanna be in the area understanding.

Thank you again!

Not confused yet, let me add another wrinkle.

There is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, the parents  (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.

Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 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 $4000 of qualified expenses on their return.

You can both use the 1098-T to enter the expenses. If you claim the tuition credit, you do need to report that you got one (the TurboTax interview will handle this) Your kid should use the 1098-T because it makes entering scholarship income go smoother.

Question: Does it mean, that if she is dependent, room and board will be in my tax return, and if she is independent and claim everything by herself, it goes to her tax return? Or room and board goes to her return in all cases by default?

Simple answer: room and board scholarships goes to her return. 

But, if room and board scholarship is already include in box 5 of the 1098-T (and it usually is), you do not need to separate it.  Follow the example in my other reply.

Thank you, great!

I received this 1099-T form. Box 1 is not empty. Box 5 contains the whole amount and does not separate tuition, which is not taxable income, and room & board, which is taxable.

Besides this fact, I am looking into bills and see that total balance for the Fall Semester is equal to the number in the Box 5, but the actual amount used was less, and she had an refund almost $1000 (985.25) which was credited to her checking account and spent for the life in the Campus - food, some dress, and e.t.c.

So what number I have to report on my Tax return - the one in the 1099-T Box 5, or the actual amount used from the the Univ financial Statement, and the excess in the amount of the refund goes to her TAX return?

And how to separate education from the room & board? There are two parts: Part 1 "Payments received for tuition" and Part 2 "Scholarship or Grants".

Part 2 is exact number from Box 5. Does it mean I have to substruct Part 2 - Part1 = "Room and board" and it will be taxable?

Or Turbotax will do this by itself, and I do not have think about it? I am afraid to start without firm understanding. I already put the rest of the info into Turbotax and do not want to corrupt the algorithm.

Thank you!

Enter the information exactly how it is reported on Form 1098-T.

In the input section, you will see a page titled "Here's Your Education Summary".

There are sections to enter your other education expenses, scholarships, and education information.

The scholarship questions will ask you to break out any costs such as room and board.

As long as you enter all of this information correctly, TurboTax will do the calculation for you.

Thank you!

But there is nothing like "Here's Your Education Summary" in my 1099-T form

There is only information about tuition cost and overall scholarships and grants. There is nothing said about "Room and board". That is why I asked the question how to calculate it.

Requested and received the Rental Verification, and this gave me the actual number that will go to daughter's TAX return.

But another problem came up : some part of the college scholarship was credited back to her checking account as the refund  according to college financial statement. In addition she got another side scholarship $500, and it also went to checking account as a cash.

Turbotax neither recognizes them, nor asks about it, and as the result request to put only Rental Room and Board balance to her tax return. Same 1099-T form - do not see any refund info on it.

What should I do? Add this refund amount along with the second scholarship to Room & Board and put it to return?

Thanks!

Update:

1.Turbotax while I was in my tax return asked my daughter to report room & board in her return. But where in the program I should put it? As far as I understand it is an income, but turbotax did not ask me about it or I do not see the specific question.

2.Where in turbotax I should put scholarships and refunds from the grants and scholarships from 1099-T? I do not see it.

3. Am I correct that daughter being dependent should answer "no" on the "Do you want to enter your higher education expenses?" question (1099-T).  Otherwise we would report 1099-T on two tax returns.

Thanks!

It is OK to enter the 1098-T on her return. You are not really "reporting" it, you are just using it as an entry tool. Nothing about a 1098-T will go on her actual IRS forms.

Even though she has taxable scholarship income, you do not enter it in the income section of TurboTax (TT).

You enter it at  "enter your higher education expenses"  At the 1098-T screen, enter the taxable amount in box 5 and zero (0) in box 1.  Do not enter the actual numbers on her actual 1098-T. Make no other entries in the education section. 

TT puts the income on line 1 of form 1040, with the notation SCH. It is treated as earned income for purposes  of calculating her standard deduction.

Many thanks!

First I am very sorry calling 1098-T form 1099-T. My negligence.

She has:

1.Room & Board Rental verification,  say $10,000 out of overall  $20,000 scholarships and grants from 1098-T;

2. Refund from the amount from box 5 ($20000) which was not used for tuition pay transferred to her checking account. ($1000);

3. Additional scholarship in the amount of say $500 in cash in her checking account.

So, she answers "yes" on the question about higher education, and put $10,000 + $1000 + $500 into box 5 of her 1098-T form "report" to make these money "reportable" even though the actual numbers are different and speaking roughly have nothing to do with the college itself?

Did I understand you? Thank you!

I would say it is far from obvious solution. 🙂 Without your help I would never come close to resolution.

It is the trick, it is much better to have the straightforward workflow in the turbotax.