Q. Since my husband is the recipient of the 1099-Q, do we need to report that amount on our tax return?
A. No, if it's fully covered by expenses. But if it does need to be entered. it goes on your return, not his.
Q. We should NOT claim my son as a dependent?
A. No. You should still claim your son as a dependent. The fact that he is reporting income, on his return, does not disqualify him as your dependent. Dependents frequently file tax returns.
Q. And we should NOT enter the 1098-T on our tax return?
A. Yes, for two reasons. You do NOT qualify for the tuition credit and you do not have to enter the tuition expense, because you are not entering the 1099-Q (you already know it's not taxable, and don't need TurboTax doing the complicated calculation).
Q. When my son files his tax return, should he say that he is NOT claimed as a dependent on anyone's tax return?
A. No. He says he can be claimed and will be claimed.
Q. When he fills out his 1098-T, he should just leave box 1 blank?
A. Yes.
Q. Does this mean we acknowledged using up all of box 1 for educational expenses already, on our tax return?
A. Yes. Even though you don't actually enter any expenses on your tax return, you effectively used them up by declaring the 1099-Q "covered".
Q. f the scholarship $ was used for additional educational expenses, would he be taxed on the difference?
A. Yes.
