Q. Can I claim him on my personal taxes to benefit from the tuition paid?
A. Yes. None of that changes the fact that he is your "Qualifying Child" dependent. There is an income limit for claiming the tuition credit ($90K, $180K married).
Q. Is he required to file taxes?
A. @Vanessa A answer is correct. and as you can see, it's complicated, very complicated.
He would not have to file , except for that erroneous 1099-NEC. A work scholarship is taxable, but it is not self employment. If you received an erroneous 1099, you have several choices:
- Ideally, you get a corrected 1099-NEC from the payer
- Don't report it on your return. Attach a copy of the 1099 and a statement explaining the circumstances. You can't e-file. From the old IRS instructions for form 1099-Misc: Form 1099-MISC incorrect? If this form is incorrect or has been issued in error, contact the payer. If you cannot get this form corrected, attach an explanation to your tax return and report your income correctly.
- Follow Vanessa's instructions for entering it and then subtracting it out.
- Enter it as scholarship. Don't enter it at the 1099-NEC screen. When asked, in the 1098-T interview if there were any scholarships not reported on the 1098-T, answer yes. Enter the $1000 there.
- Enter the 1099-NEC. At the screen, "Does one of these uncommon situations apply?", answer "this is not money earned as an employee or self employed person......". This reports it as unearned income. That's not a problem in your case, since it's less than $1300 (the kiddie tax threshold).
- Do nothing and hope you can explain it away when & if the IRS contacts you
I would do #6. That gets you you out of having to file. #5 would be my 2nd choice.
