Thank you again for your detailed explanation.
Yes, It's for an engineering degree. Like you mentioned, the university stipend (paid to the student) about $30,000- amount on the w2. The students are required to perform research to get their graduate degree. The school also "charges" about $X in tuition(Is box1 the tuition amount?) . On the student pay stubs, they showed the tuition amount, what's left was student's income. (confusing)
"In this situation, the stipend is taxable income, but not subject to social security and medicare tax." - That's correct, the w2 earnings.
"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." - That's fine. Why the the school issue a 1098-T to complicate the issue?
I entered the information correctly on form 1098-T in Box 1 and and 5 as it asked. It taxed on the scholarship amount? Confusing!
Thank you again!
