1. Child has no income - not true. Any scholarship income greater than the tuition is income to the child - it is a hybrid income and may involve the Kiddie Tax. See -see What is the Kiddie Tax?
2. Room and board - not necessary for your situation with a 1098-T
3. Education credit - requires you to have paid $4,000 out of pocket for the student.
4. You may want to include it on your taxes but in a different way to get the education credit.
The IRS has a loophole when the scholarship is more than the tuition. You will each need to enter the 1098-T but in different ways
Let's check the boxes:
- Child is your dependent
- Your income supports you claiming the education credit:
- For the full credit, your MAGI (modified adjusted gross income) is less than $80,000 ($160,000 if you're filing jointly)
- For a reduced credit, your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you're filing jointly)
- There is no credit given if your MAGI is above $90,000 ($180,000 if you’re filing jointly)
5. He may need to file. You can quickly run through the IRS quiz Do I Need to File a Tax Return? Once we get this sorted out.
If the parent qualifies for AOTC and claiming dependent:
What you should enter to get the credit.
Enter the 1098-T box 1 $4000 box 5 zero
What the student should enter:
Box 1 amount was $8300 but parent took $4000 this leaves $4300. Student will enter $4300 box 1
Box 5 full scholarship amount of $19000
Look at how your taxes are affected and if the kiddie tax comes into play.
You can change the numbers on student and parent return. The parent max is $4,000 but can be lowered and incrementally raise the student tuition amount.
For example: Parent could claim $3k, then student would only subtract $3k from total paid.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
