1098-t

[gardendeb]

Am I missing something . . . I am working on my college son's taxes and when I put in the amount of the merit scholarship he received off of the 1098-T, Turbo Tax indicated that he owed taxes on that amount.  This did not happen last year.  Is this correct?

[JotikaT2]

It depends.

You will report the 1098-T tuition on your tax return and enter any applicable scholarships as part of your entries into the program.

1.  Go to the Federal section.
2. Click on Deductions & Credits
3. Select the Education tab
4. Select Tuition and proceed to answer the questions.

Scholarships are taxable if used for the following items:

• Room & board
• Travel & incidental expenses
• Any fees, books & supplies not required for classes

 Scholarships are not taxable if used at an eligible school for a degree if used for:

• Tuition & fees
• Fees, books, supplies needed for classes
• Scholarship or fellowship for services from:
• National Health Services Corps Scholarship Program
• Armed Forces Health Professions Scholarship & Financial Assistance program

 Help for when scholarships are taxable vs. not taxable

The excess of the scholarship income over the actual allowed education expenses would be reported on your son's return as scholarship income. 

However, he would need to meet the filing requirements threshold to determine if he even needs to file a return. 

Please see the following to help you determine if he needs to file a tax return.  

Gross income amount for dependents

[gardendeb]

Thank you for your answer.  Are you saying that this information should be entered on my (parent) tax return.  I've also seen information, that he may not even have to include the 1098-T on his tax return.  FYI . . .  He does need to file to receive taxes that were withheld from a part time job. 

[JotikaT2]

That is correct.  If you are claiming him as a dependent, you as his parent will report the 1098-T to claim the education credit.

If his income is below the filing threshold attached before, he does not need to file.  

If as you are starting he had withholdings on his earnings from his part-time job, he can file a return to potentially get a refund for any withholdings made. 

If he does file his own return, he will need to report the scholarship income which is considered taxable on his return.