Who enters 1098T on the tax return, my daughter or I ?

[mdgeo81]

Hello! Please assist if you can, this is the first time I’m adding 1098T to the tax return. My daughter is my dependent, although she worked a bit during 2019-2020. She has a 1099-misc form for $3,723.75 and a W2 from her college (different state from residential address) for $497.  We received a 1098T form, and box 1 shows amount of $35,472.00 and box 5 shows $34,709.00 (the scholarships included board and room). As I understand, because box 1 is more than box 5 - I will be the one adding 1098T to my tax return. She will also need to file her own taxes adding the 1099 form and her W2, correct? Is there anything that I am missing? Thank you in advance!

[MinhT1]

Yes, you are correct. As your daughter is your dependent, you only can claim her education credits and enter her 1098-T form on your tax return.

She is required to file her own tax return as she has a form 1099-MISC for more than $400. She has to report both her forms 1099-MISC and W-2. She has to indicate on her tax return that she can be claimed as a dependent by someone else.

[mdgeo81]

Thank you!

[Hal_Al]

You say  box 1 (of the 109-T)  shows amount of $35,472 and box 5 shows $34,709. At first glance, you only have $763 (35,472-34,709=763) of qualifying expenses to use to claim the Tuition credit.  It takes $4000 of expenses to get the maximum  tuition credit.

You also say the scholarships included board and room.  Scholarships that pay for room &board are considered taxable income, and go on the student's return. 

The TurboTax interview can handle all this, but it can be tricky.  

[mdgeo81]

Thank you! That’s why I asked who adds the 1098T. I read a lot of information and it gets tricky when scholarships include room and board. I’m already contemplating if I’d rather see an accountant, just to clarify all the questions. 

[Hal_Al]

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 daughter should use the 1098-T because it makes entering scholarship income go smoother.

Although the TT interview can handle it, using   a work around in TurboTax (TT) may go easier. Here's how I would do it. Enter the 1098-T, on your return, but only enter $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.

If you know how much of her scholarship is taxable; on her return, enter 0 in box 1, at the 1098-T screen and the taxable amount of scholarship in box 5. 

If you need TT to calculate the taxable amount; Enter the 1098-T, exactly as received, on the student's return. In her 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 her excess scholarship as income on her 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 . The alternate workaround is  to enter $4000 less than the actual box 1  amount, when you enter the 1098-T on the student's return or $4000 more in the box 5 amount.