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J_34
Returning Member

Entering 1098T into TurboTax for our dependent

I have done plenty of reading in the TurboTax Community on rules and methods of entering college expenses with a 1098T for a dependent child. I believe I have a good grasp on what I need to file, but am questioning the proper way to enter figures into TurboTax.

Specifically, we need to enter a portion of the scholarship total received as taxable income on the daughters return.

 

So first, as parents, we will enter the 1098-T in our return as it is listed. (Daughter happens to have less Scholarship than tuition for what it is worth). Then after entering the 1098-T, there is a section that comes up “ Did (students name)  pay for room and board with scholarship or grant”.  I think the total I enter in this field will be naming the amount to be considered taxable out of the original scholarship amount.  Example... received $5,000 Scholarship total, name $1000 as taxable due to paying room and board with it. So $4000 will be applied to tuition and daughter will list $1000 as taxable income. 

 

So the question I really have is how to go about including $1000 as taxable income from the scholarship on the daughter's return. When the 1098T is entered on her taxes, Turbotax says she is a dependent and not eligible for  any credits (which is correct), but then includes the whole original amount of the scholarship from the 1098 on her income. So what is the proper way to include the taxable portion without double entering the 1098? I am guessing it is obvious but I am just missing it somehow.

 

Thanks in advance!

3 Replies
MarilynG1
Employee Tax Expert

Entering 1098T into TurboTax for our dependent

Room and Board cannot be paid with Scholarship/Grant Funds, only with 529 funds.  Don't enter an amount for this if you didn't also have a 1099-Q to enter for a 529 distribution. 

 

If Tuition is larger than Scholarships on the 1098-T, you could qualify for a credit and the student has no Excess Scholarship to report on their return (if they are required to file a return).  You can enter the 1098-T in your return. 

 

Your daughter would need to have income over $6300 (including any Excess Scholarship) to be required to file.  If she is not required to file, the excess scholarship is not reported. 

 

Click this link for info on How to Enter a 1098-T

 

 

 

 

 

 

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Bsch4477
Level 15

Entering 1098T into TurboTax for our dependent

If you are eligible for taking the American Opportunity Credit and your student does not have a filing requirement or made little income you can do this. 

Assume box1 tuition is $12,000 and scholarships in Box 5 is $8000. On your return you could report that you spent the entire $12,000 from your funds and so claim the credit based on the full $12,000. 
While the $8,000 is income to the student, if the student doesn’t have a filing requirement because of low income, the student would not have to file a return and so not be taxed on the scholarship amount. 

J_34
Returning Member

Entering 1098T into TurboTax for our dependent

What I am understanding by reading IRS publication 970 "Tax Benefits for Education"  https://www.irs.gov/pub/irs-pdf/p970.pdf

Is that you can choose the best way to apply the scholarships received providing they are not assigned with tuition only restriction. The above document lists several examples for the American Opportunity credit. On page 16 under the section "Coordination with Pell grants and other scholarships" gives an overview of including a portion of scholarship money as income (paying unqualified tuition expense which makes it taxable).

Following onto the example on page 17 titled " Scholarship partially included in income" is what I was looking to do. 

I apologize, I can't figure out how to copy/paste out of the pdf file

 

 

This leads me to my original question of the portion of the scholarship which is considered taxable income to the dependent daughter. How do I show this as taxable income on her return through turbotax.

 

Although the point was brought up that she does not technically need to file a return when her income is under a certain amount. Which would be under $5000 even with $4000 taxable scholarship income added.  But I feel that it would be better to file one for her just to have it on record? Just my initial feelings.

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