topic Re: 1098T in Education

1098T

Dawn836 — Sun, 16 Feb 2020 23:24:05 GMT

I already filed my taxes which I added my working college student daughter I claimed as my dependent. I put her 1098T on my taxes which I didn't qualify for the tax credit. Do I put it on her tax return since in box 5 her Grant was $3098.00 and in box 1 her payments received for qualified was $2542.30?

Re: 1098T

LinaJ2020 — Mon, 17 Feb 2020 18:21:54 GMT

Yes, if there is an excess scholarship amount, you would need to report on her tax return. You do not report it on your own taxes. If she has made enough wages and met the filing requirements, you would just add it to her taxes. It will be a taxable income to her. However, if this is the only income to her, she does not need to file.

Re: 1098T

Dawn836 — Tue, 18 Feb 2020 14:05:54 GMT

I already filed taxes cause When I looked it up , it said you add the 1098T on the parents tax since she’s my dependent. So if I put it on her hers too will it affect anything?

Re: 1098T

Hal_Al — Tue, 18 Feb 2020 23:33:53 GMT

Q. So if I put it on her hers too will it affect anything on my return?

A. No, as you already said you were unable to claim the tuition credit.

Q. Do I put it on her tax return since in box 5 her Grant was $3098.00 and in box 1 her payments received for qualified was $2542.30?

A. She technically has $556 of taxable scholarship (unless she has other expenses, like books that she can offset), if she otherwise ("working college student") has to file a tax return.

There are possible other issues for you. What is her age and was she a full time student and how much wages did she earn (affects whether you can claim her as a dependent)? You actually may be able to claim a tuition credit.

Re: 1098T

Dawn836 — Tue, 18 Feb 2020 14:31:24 GMT

After her tuition for classes was paid for from the grant they put the $556 in her bank acct. She used the money to buy books for her classes. She’s 19, lives with me and goes to a community college, She made $8889.88, and on the 1098T form it’s checked that she’s at least a half-time student. She was still in high school half the year.

Re: 1098T

Dawn836 — Tue, 18 Feb 2020 14:35:04 GMT

I just don’t want to mess anything up on her taxes. My tax return has been approved and already gotten my state refund. Every time I look info up on 1098T it’s very confusing. Since there is the $556 should I just put it on hers too?

Re: 1098T

Hal_Al — Tue, 18 Feb 2020 23:49:14 GMT

No, you don't need to put the $556 on her return. It's not enough to change anything.

But, here's the real deal: you have between $855 and $2135 coming from the IRS. File an amended return and claim the American Opportunity Tax Credit (AOTC), i.e put the 1098-T on your tax return.

There is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, the parents (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship. You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.

Using your numbers: Student has $3098 in box 5 of the 1098-T and $2542 in box 1. At first glance she has $556 of taxable income and nobody can claim the American opportunity credit. But if she reports $3098 as income on her return, the parents can claim $2542 of qualified expenses on their return.

The $3098 added to her $8890 wages is still less than the $12,200 threshold for having to pay any tax.