1098T and who's return (student or parent or both) if claiming student and not qualifying for credits

[joboos]

I wanted to clear a few things up to make sure I'm entering things in right....

- I've claimed student as a dependent

- Income is too high for any credits

- I've put the difference between Box 5 and 1 on my students return as scholarship income ~5.5k

- I've put ~1k in regular income from his internship

- I've put the 1098T on my taxes, solely to be able to enter in the expenses so I don't have to pay penalties on my 529 withdrawals  

Do I need to enter in the 1098T on student's taxes if I've already put the scholarship income in?  The 1098T is addressed to him.  Putting it in doesn't change anything owed or given back, since i already had in the income number and i'm not filing any expenses on his return.   

Thanks in advance for the help....

[SharonD007 · Accepted solution]

No, you do not need to report the 1098T on your child’s tax return since you are claiming them as your dependent. I’m assuming that Form 1099-Q has your SSN on it. Form 1099-Q only needs to be reported on the tax return if the withdrawal is more than the tuition paid in Box 1 of the 1098-T plus other adjusted qualified educational expenses. In that case, the earnings on the excess distribution would be taxable income. To find out what are qualified educational expenses, please review the Guide to Tax Form 1098-T: Tuition Statement and the IRS link on Qualified Education Expenses.

To determine if you need to report the 1099-Q, add up the tuition paid from the 1098-T in box 1 plus the qualified education expenses and subtract any amount that may have been refunded. If the total is more than the amount in box 1 of the 1099-Q, you do not need to report Form 1099-Q on your tax return. If the total is less than the amount in box 1, some of the earnings in box 2 of the 1099-Q will need to be reported as ordinary income and you will pay an additional 10% penalty tax as well on that amount. TurboTax will ask you questions as you enter the 1099-Q and make the calculations. The gain is not reported, if it was used for qualified education expenses.

 For your child files a tax return, make sure the box is checked indicating that someone else will claim them as a dependent.

[Hal_Al]

Q. Do I need to enter in the 1098T on student's taxes if I've already put the scholarship income in? 

A. No. Technically, the 1098-T is only an informational document and the numbers are not required to be entered on to either the student or the parent's return.  

However, when some of the student's scholarship is taxable, it's helpful to enter the 1098-T to properly report the scholarship income.  Verify that the scholarship income was reported on line 8r of Schedule 1.  

Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $12,950 filing requirement and the dependent standard deduction calculation (earned income + $400).  It is not earned income for the kiddie tax and other purposes (EIC. IRA contributions).

The 1098-T can be entered on both returns, as needed.