She had 16,501 of total income but 9,799 of that was from the taxable scholarship.
There's no way possible that the student provided more than half of their own support. There are only two possible ways the student can have a valid claim to providing more than half of their own support for the entire year.
- The student had a W-2 job or was self-employed, and the "EARNED" income exceeds half of their "support" expenses. In your case, there's no way the student's $6.702 of earned income was enough to provide more than half of her own support. So with that, she qualifies as your dependent.
- The student was the *PRIMARY* borrower on *qualified* student loans, and a sufficient amount of that borrowed money was distributed to the student in the tax year, to cover more than 50% of their support.
So in your case, the student does not have a choice here and "MUST" select the option for "I can be claimed on someone else's return". But you the parent do have a choice to claim the student or not. But it doesn't matter if you don't claim the student as your dependent. The student has no choice and must select the option to indicate they can be claimed on someone else's tax return. Period.
So from the numbers provided, is $9,799 the taxable "portion" of the total scholarship received? Or is it the total scholarship received? I asked, because all scholarship/grant money received is treated as taxable income "initially". It's taxability is offset by the qualified education expenses they are used to pay for.
I know you're initial question is about the healthcare stuff, and I've not forgot that. I just need to help you work out if you are going to claim 100% of the premium tax credit, or if you have to pay back that percentage of the credit that applies to your student, and your student get's the credit for that on their own tax return. The first order of business to that end, is to determine if the student is "required" to file a tax return.
If $9,799 is the total amount of all scholarships, grants, 529 distributions received by the student, and that total exceeds the total of all qualified education expenses, then it "sounds" to me like this could go either way on the student's tax filing requirement.
I'm trying to make sure without a doubt, that I have the entire picture here. That premium tax credit thing can be tricky. So we have to "know" we have this right. I can't be guessing here.
