Q. Do I need to enter the 1098-T information on the student taxes?
A. No, unless the student's scholarships exceed her adjusted qualified expenses. Then, she would have taxable scholarship income. Student dependents do not usually qualify for an educational credit.*
Q. The 1098-T is being reported on the parent taxes and again we do not qualify for any educational tax credits. Correct?
A. No. Like the 1099-Q, the 1098-T is only an informational document. You do not enter it on the parent's return if the parent's do not qualify for an educational credit or the expenses are not needed to calculate the taxable portion of a 529 distribution ( if you don't enter the 1099-Q, you don't enter the 1098-T).
*If the student actually has a tax liability, there is a provision to allow him to claim a non-refundable tuition credit. But then the parent must forgo claiming the student as a dependent, and the $500 other dependent credit. The student must still indicate that he can be claimed as a dependent, on his return. This is worth up to $2500 (AOTC shifts to all non refundable)
