Q.1. Is my son (or the parents) responsible for reporting the excess scholarships ($28,962- $14,147=$14,815)?
A.1. Your son.
Q.2. Who would report the $750 stipend?
A. 2 Your son.
Q.3. To report the excess scholarships, would they simply enter the 1098 T information on their return?
A. 3. Yes, usually.
Q. 4. Can the (parents) claim the out of pocket expenses ($1,013) and claim a portion of the American opportunity credit?
A. 4. Yes, since he is your dependent.
Q. 5. Can we still claim him as dependent, even if he reports the income?
A. 5. Yes. A "qualifying child" dependent's income is irrelevant.
Q.6. On Form 8615, there is a question..” if the parent elects to report income on their return”.. Would we need to check this box or not?
A.6. No. That option is not available in your situation. If his only income is from interest and dividends, or capital gains distributions shown on a 1099-DIV, there is a provision for entering it on your return, using form 8814, instead of form 8615 on his return.
Q.7. He received a 1098-T that indicated that he got more scholarships than qualified educational expenses: Box 1 = $14,147 Box 5: $28,962. Scholarships are only used for tuition and cannot be used for room and board.
A. 7. That doesn't make sense unless box 5 also includes scholarship for the first term of the following year. In that case he shouldn't be paying tax on it. It's not uncommon for schools to mismatch the tuition and scholarship years on the 1098-T.
The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or possibly your student has taxable scholarship income.
You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. In the 1098-T screen, click on the link "What if this is not what I paid the school" underneath box 1. You will then be able to enter the actual amounts paid. You will also reach a screen that allows you to adjust the scholarship amount for "amounts not awarded for 2022 expenses".
