@magicstar41000-y wrote:
We are obviously not working with all the facts.
Your child has a W-2 for working as a graduate research assistant. How much was the wages? Your child has a 1098-T showing box 1 (tuition payments received) of $50,000 and box 3 (scholarships) of $30,000.
What type of program is your child enrolled in? Is your child a graduate student in a STEM field, which often results in a tuition waiver plus a stipend? Or is your child required to pay tuition? Does your child receive a scholarship?
Of the $50,000 that the school reports as tuition received, did you or your child pay any part of that, with cash out of pocket or with student or parent loans?
" For example, if earned $50,000 from working as a RA(hourly rate * hours worked), w2 showed $30,000, the other $20,000 had deducted before tax towards the tuition."
If that is a real example, it is probably not legal. You are creating examples that can't exist under the law. It would be better to explain your actual circumstances.
Let me go back to some basics, at least as far as STEM is concerned. I work at a major university and I have grad students in my lab. The university stipend (paid to the student) is about $30,000 (give or take). The students are required to perform research to get their OhD. The school also "charges" about $16,000 in tuition, but that is waived--paid by the Dean's office in the first year and paid by the student's faculty mentor in the remaining years (unless the student gets a grant of some kind). In other words, the school pays itself the tuition, by taking the money from the faculty mentor's funds and putting it into the graduate program's funds.
In this situation, the stipend is taxable income, but not subject to social security and medicare tax. The tuition waiver essentially does not exist. The school pays tuition to itself, and there is no way you can use the waived tuition to claim any kind of educational tax credit, either in the parents name or the students name.
On the other hand, your child might be a graduate student in English (for example) where students do not receive tuition waivers and are required to pay tuition. The grad assistant pay might be to help the professor take notes and write a book, which is not a requirement to get the advanced degree your child is working toward. In that case we need to know more about what tuition you or your child actually paid and what the W-2 income was actually for.
There is also something wrong if you are entering a 1098 showing that the school recieved $50,000 in tuition, that your child received $30,000 in scholarships, and that $30,000 is taxable income. You likely entered something incorrectly or answered one of the questions wrong.
