Our son’s college has issued a 1098T in his name, but we're (Parents filing jointly, with son as a dependent) paying for and taking the tax credits for his expenses on our return.
When doing our SON'S taxes, Turbo Tax is asking if he received a 1098T. Since we are claiming it on our taxes, do we just say he didn’t receive a 1098T, or do we still need to include in both our returns since it’s in his name? - If I answer "yes," then it seeks out deductions that will be taken on our taxes. If I answer "no" then it skips the deductions, but gives me concerns that it will be flagged as an unreported tax form, causing issues down the road.
Thanks for you help!
Still struggling here..I answer no on her tax form that she received a 1098-T since I am claiming her as my dependent. Then I answer yes on my form?
I had the exact same question. I couldn't find a direct answer either. I know that only one of us can claim the expenses but TurboTax is still asking for this info on my son's return. So I entered the 1098-T on my return and claimed all expenses and took the credit. For my son, at the prompt I entered the 1098-T again and that's when TT told me that he's not eligible since he was claimed somewhere else and the credit/expenses were already taken. I believe this is where the confusion begins. TurboTax explains all of this but then says, "However, you should enter your education expenses to avoid paying tax on your Education Savings Account (ESA) or qualified tuition program (QTP)." Why does it tell us to put it all on parents form and then asks child to still enter education expenses here on his own? I switched to forms and checked my son's 1040 form to confirm that even though I entered the 1098-T again on TT on his form, he is receiving 0 for education expense and 0 higher education credit. My husband and I have it on our return.
so is it correct to say no when asked if dependent received 1098t if parent put the info on their return
Yes. The 1098-T is only an informational document. There is no requirement to enter it. Entering it on the student's return just makes it complicated and can lead to mistakes.
This is a serious point of confusion, and no one has answered it definitively. So much for TurboTax online support, huh? The prompts regarding tuition expenses and 1098-T forms lead users in circles. It's been 4 years since someone brought this up, how about someone at Turbo Tax stepping up to the plate and fixing this mess once and for all?
Answer no on his return, since you have already claimed it on yours. The 1098-T is only an informational document. There is no requirement to enter it. Entering it on the student's return just makes it complicated and can lead to mistakes.
Wou?ld this be true of the reverse? We are claiming our daughter as our dependent but would like her to claim all of her tax credits. Should we answer no on our filing when it asks if she received a 1098-T
If she is your dependent, she is NOT allowed to claim the tuition or any other tax credits. Even if she were not your dependent, There are restrictions on a student claiming herself and getting the refundable portion of the American Opportunity credit.
Aren't some of the scholarships (room and board) taxable? If we simply fail to list the 1098-t on the child's form, won't that be a problem?
kyle.r.hannon,
Yes, scholarships that pay room & board are taxable. Not listing the 1098-T is not a problem in such cases, as long as you know and enter the taxable amount. Many people don't keep good records, and have to rely on the 1098-T to determine the taxable amount (essentially box 5 minus box 1 or box 2)
Furthermore, 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 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.
Well, if Hal_Al is right then Turbo Tax should not have asked that question on my child's return after I had already stated that someone else will claim her. This is not right of Turbo Tax to confuse people.
A year later and this is still confusing as ever. If the parents are taking the tax credit and report the 1098T on their return, where would the students taxable portion of the scholarship (income) get entered if the 1098T info isn't repeated on the students return?
My son has a full ride. His taxable scholarships are $8787. Are you saying that I should add $4000 (the amount needed to get the full American Opportunity Credit) to the $8787, thereby increasing his taxable income?
@taxmom99 - Yes. That qualifies you for a $2500 tax credit ($1000 of which is refundable), and he only pays $59 in tax (assuming the scholarship is his only income).
My Daughter (19[PII removed]) worked for the first 6.5 months to gather some money to help pay for her college. She earned about 16000. After that, she started full time college and she was even able to receive to state aid to cover for the tuition. She received a form1098-T and, as far as I understand, she has to file taxes. I am including her as a dependent on my Taxes and I am adding the 1098-t she received. The aid she received cover the all tuition, but is not enough to cover for room and board. Should I include her 1098-T on my tax declaration or it would be better for her to include it on hers?
You will claim this on your return since she is your dependent.
When she files her return, she will need to be sure to mark that she is being claimed as a dependent on another return.
The simple answer is neither of you claim the 1098-T. The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or possibly your student has taxable scholarship income. Since, the scholarship fully covered the tuition, you cannot claim the tuition credit and none of the scholarship is taxable to her because it was used for qualified expenses (tuition).
But taxes aren't simple. In actuality, you will both probably enter it. There is a tax “loop hole” available. The student reports all his scholarship, up to the amount needed to claim the American Opportunity Credit (AOC), 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 an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.
Books and computers are also qualifying expenses for the AOC. So, extending the example, the student had another $1000 in expenses for those course materials, paid out of pocket, she would only need to report $5000 of taxable scholarship income, instead of $6000.
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You can both use the 1098-T to enter the expenses. If you claim the tuition credit, you do need to report that you got one (the TurboTax interview will handle this) Your student should use the 1098-T because it makes entering scholarship income go smoother and puts the income in the right place on the tax forms. There is a change for 2022. Taxable scholarship is now reported on (new) line 8r of Schedule 1, rather than line 1 of form 1040 with SCH notation.
You essentially have to use a work around in TurboTax (TT). Here's how I would do it. Enter the 1098-T, on your return, but only enter $4000 in box 1 (assuming there was at least $4000 in box 1). No other numbers. You only enter the 1098-T to get TurboTax to check the proper box on form 8863. Lying to TurboTax to get it to do what you want does not constitute lying to the IRS.
Enter the 1098-T, exactly as received, on the student's return. Enter book expenses separately. In his interview, you should eventually reach a screen called "Amount used to calculate education deduction or credit" Be sure the amount in that box is $4000. That will put all his excess scholarship as income on his return.
Be advised some people are saying they're not getting the "Amount used to claim the tuition deduction or credit" screen on the dependent’s interview. Check the student information work sheet (part VI, line 17) to verify it was entered. If not, the alternate workaround is to enter $4000 less than the actual box 1 amount, when you enter the 1098-T.
There's yet another (and simplest) work around. Manually calculate the taxable amount of scholarship and enter the 1098-T, on his return, with 0 in box 1 and the taxable amount in box 5. In that case be sure the amount in the "Amount used to claim the tuition deduction or credit" box is 0.
@Daniro If she had $16,000 of spendable income, are you sure you can claim her as a dependent? Yes, probably.
There are two types of dependents, "Qualifying Children"(QC) and Other ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test.
A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:
So, it doesn't matter how much he earned. What matters is how much he spent on support. Money he put into savings does not count as support he spent on himself.
The support value of the home, provided by the parent, is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants.
The IRS has a worksheet that can be used to help with the support calculation. See: http://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf
Hi. Thanks for your prompt responses.
You wrote: If she had $16,000 of spendable income, are you sure you can claim her as a dependent? Yes, probably.
I guess the answer is yes, since she was 18 starting 2022 and made 19 on May. Also she started college on August 15, so Assuming August as a full month, that would be 5 months (He is under age 19, or under 24 if a full time student for at least 5 months of the year,). Also she lived with us from January to July. "As you wrote"He/she lived with the parent (including temporary absences such as away at school) for more than half the year.
I also considered no to add her as a dependent this year, but she she is on my 1095-A, so I guess she needs to be. By the way during the filling of the 1095-A there appeared a question about if any of my dependents was going to file taxes, when I answer yes, it asked the Magi Income (something like the gross income) and when I put the value, my taxes to be paid increased an important amount (obviously by the time I fill the data (Nov 2021) on the healthcare marketplace I did not considered that my daughter was going to be working or even less that she was going to make the minimum to file taxes.
I have some questions on your other post, so I would reply on that.
Thanks again