topic 1098t about scholarships/grants in Education

1098t about scholarships/grants

mwelsh5 — Mon, 15 Mar 2021 23:08:41 GMT

My daughters income went up and will have to file this year. Her grants and scholarship may be considered income. I am trying to decide on claiming and not claiming, Can the tuition, books materials payed be deducted? can that be reported on our taxes and she files her return for income from work or it is considered part of he income and filed as part of her return.

Re: 1098t about scholarships/grants

MaryM428 — Tue, 16 Mar 2021 01:20:30 GMT

if your daughter was under 24 on December 31, 2020, was a full-time student, and did not pay more than 1/2 of her own expenses, then she is your dependent and you claim the 1098-T and any credits.

Your daughter will check that someone else can claim her a dependent on her return.

Educational expenses - what you can deduct

Re: 1098t about scholarships/grants

Hal_Al — Tue, 16 Mar 2021 14:20:05 GMT

Scholarships used to pay qualified expenses (tuition, fees, books and required course materials) are tax free. So, yes, they can be "deducted" in determining the taxable amount. Usually, a student only has taxable scholarship income, if box 5 of the 1098-T exceeds box 1.

Taxable scholarship must go on the student's return, not the parents. It's not optional.

You do not report his/her income on your return. If it has to be reported, at all, it goes on his own return. If your dependent child is under age 19 (or under 24 if a full time student), he or she must file a tax return for 2020 if he had any of the following:

Total income (wages, salaries, taxable scholarship etc.) of more than $12,400 (2020).
Unearned income (interest, dividends, capital gains, unemployment) of more than $1100.
Unearned income over $350 and gross income of more than $1100
Household employee income (e.g. baby sitting, lawn mowing) over $2100 ($12,400 if under age 18)
Other self employment income over $432, including money on a form 1099-NEC

Even if he had less, he is allowed to file if he needs to get back income tax withholding. He cannot get back social security or Medicare tax withholding.

In TurboTax, he indicates that somebody else can claim him as a dependent, at the personal information section.