We got a 1098-T for 2024 where line 1 is less than the tuition and fees paid in 2024 (forget about R&B, meal plans, books). I understand that not all expenses (e.g., R&B, meals) count toward the AOTC, but we're not claiming the AOTC this year. However, we did take money out of the 529 (much less than what the university charged us, since the 529 is running low), and now over $2500 of that is being taxed as income. Where do I put the additional charges the university is not including on line 1? Or do I modify line 1 to be what we actually paid for allowable 529 expenses?
If you're not claiming the AOTC, and your 529 distribution was all used for Education Expenses, you are not required to enter either of these documents into TurboTax. Just keep them for your records.
Here more info on Form 1099-Q and Form 1098-T.
If you're not claiming the AOTC, and your 529 distribution was all used for Education Expenses, you are not required to enter either of these documents into TurboTax. Just keep them for your records.
Here more info on Form 1099-Q and Form 1098-T.
So even though we filed the 1098-T the last 2 years, we don't need to fill out that portion of the 1040 this year? We're not claiming it since Roth conversions put us over the income limit.
No, the 1098-T is not required to be filed, unless you're claiming an Education Credit.
Great, thank you. While we're on the subject, if our 21 yr old can pay more than half her own support in 2025 (counting a 529 distribution we will have sent to her instead of the parents, so she can pay fall tuition), can she claim the AOTC for this year if we don't claim her as a dependent? She has a summer job that includes housing, so if the 529 distribution for fall goes to her (and maybe she claims her scholarship as income), that's achievable. I'm having trouble interpreting the rules for a student who *can* be claimed as a dependent vs one who *is* claimed as a dependent.
1. The student may not get as much credit as a parent since AOTC reduces your tax liability and is only partially refundable (up to $1,000). A parent claiming the child has a higher chance of getting the full $2,500 credit.
I suggest looking at the IRS Worksheet for Determining Support. Vacations, lodging, many things go into supporting a student. If the student is providing half of their support, then they should file their own return and claim the credit.
2. Can be claimed and is claimed has a lot of area to cover and questions in between. For example, if the parents are both disabled and don't file a return, the child isn't being claimed but could, if the parents were filing. The program walks through all the necessary questions, including if you have a parent alive, and will determine which of the rules apply to the education credit.
References:
Rules for Claiming Dependents on Taxes - TurboTax - Intuit
AOTC - American Opportunity Tax Credit -IRS
Our income will be above $180,000 so we will not qualify for the credit, which is why I'm asking if the student can claim the credit (only worth it if she owes more than $500 in taxes) if we don't claim her as a dependent even though we *could* (as long as she pays more than half her support this year).
Yes your dependent student may claim the (non-refundable portion) credit.
In your situation, support does not matter since you are saying
that the student IS a dependent
The dependent student in this situation can file a return and claim the non-refundable portion of the credit-
they select "Another taxpayer can claim me"
BUT THEY ALSO SELECT "Another taxpayer will not claim me"
They would continue through the TurboTax program, enter the education expenses and if they qualify, they would get the non-refundable portion of the credit.
A non-refundable credit means the credit can lower the tax liability, but not below zero. If there is excess credit, that excess is lost.
The student is filing as a dependent, so they do not need to meet the requirements of not being a dependent.
Thank you. We don't expect her to be able to claim the refundable part. I just wanted to make sure she could claim the nonrefundable part, IF her tax bill is going to be over $500. Frankly, I haven't looked at the single filer standard deduction, so she still may not have any tax bill at all, even with earning $18/hr over the summer.
But, for the sake of argument, let's say she earns $9000 gross this summer, housing is included so we won't be paying for it. She pays for her own groceries all year, and for her fall rent out of her savings (from the summer job plus what she has left in the bank from last summer). We paid spring tuition and meal plan. If the 529 pays the school directly for tuition and fees (and perhaps a "commuter" meal plan for lunches on campus) in the fall, then the only support we would be giving her in 2025 is the spring payment to the school of a little over $12,000. Would she qualify for the refundable portion of the AOTC if the 529 paid say $10,000 in tuition and fees to the school in the fall, and she paid over $3000 in rent for the fall and groceries all year (a full meal plan for 1 semester is over $3000 and room is about the same)? Or would she only be able to claim the nonrefundable portion since her gross earnings were only $9000 and her *earnings* need to be over the $12,000 that we paid in "support"?
You can pay her tuition as a gift. And she will be paying more than 50% of her living expenses so she should be fine claiming herself and getting the AOTC.
Sorry, if the 529 pays the whole tuition then no one can claim the credit. So let me modify the scenario. We've paid $12,000 (rounding) for her support so far in 2025. If she uses a $4000 scholarship (which she claims as income) for fall tuition, and has the 529 pay $6000 directly to the school, then takes $4000 out of the 529 to pay her rent and groceries (so still total of $10,000 out of the 529, but none of it paid to parents) for a total of $14,000 and she supports herself all summer with the included housing and paying for her own groceries (no car so no expenses there), would she be able to claim the refundable portion of the AOTC? Her earned income would be $9000 plus the $4000 fall scholarship and she could also claim the $4000 spring scholarship as income. She's still on our medical and dental insurance but it's the same premium for 3 people as for 2 people, so do we have to count any of that as her support? Or only what we might pay out of pocket, say if she needed a filling and there was a copay or deductible that we paid?
In order to be considered independent, a student has to pay over 50% of their support with earned income. Paying expenses with student loan, scholarship, etc. funds does not constitute self-support.
Here's more info on Did I Support Myself? and What does Financially Support Mean?
So even if a scholarship is claimed as taxable income, it's not "earned"? She would have to pay more than 50% of her support (and tuition counts as support) out of *earned* income, not taxable income, not prior savings balance, so in essence, gross wages have to be more than the 50% of the support?
It depends. Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $14,600 filing requirement (2024) and the dependent standard deduction calculation (earned income + $450).
Savings would count.
Here's more info on Taxable Scholarship Income.
I deleted the 1099-Q and the 1098-T is still there but now TT is saying that she doesn't qualify for the "other dependent" $500 credit. Should I add in the amounts that are not on line 1 of the 1098-T (I can go to Forms view and see that) and put the 1099-Q back in?
I entered "other educational expenses" but even after entering books and her room and board we paid to the university, the number shown on line 1 is less than the tuition and fees that we paid for spring, summer and fall tuition according to the statements we got from the school. Can I edit line 1?
No, enter the 1098-T as issued. If Box 1 is larger than Box 5, you may qualify for a credit, although you said earlier that your income precludes this. If so, no need to enter the 1098-T. If you believe Box 1 does not reflect the correct amount of Tuition Paid, click the link 'this is not what we paid to the school' and enter the correct Tuition amount.
You can enter 'Additional Expenses' like books, fees, etc. in the Education section.
Her qualifying as your dependent has nothing to do with the 1098-T. If she was a full-time student for 5 months or more in 2024, and is under age 24, she is your dependent. If this applies, her income is irrelevant to your return. Check your entries for her in the Personal Info section.
Thanks, I did click on "this is not what we paid" and I put in the books, and the room and board, and then I modified line 1 for all the tuition and fees we paid. I still can't figure out what they counted on line 1, because just tuition and and required fees are more than $754 more than that. Unless they are not including the $721 we paid but then she changed a class and they credited that to spring bill (we didn't take it out of the 529, we took thousands less than what allowable expenses were because we want to save the 529 funds for this year and next year). As I understand it, that is allowed since the spring semester started the first quarter of 2025. Should I also check that box? Or should I subtract the $721 from the actual tuition and fees we paid in 2024, and only include the tuition and fees *charged* for sessions starting in 2024?
I will try deleting both the 1098-T and 1099-Q because the last time I tried we still had taxable income from the 1099-Q. I figured out why we lost the $500 dependent credit - because of Roth conversions, we were over $410,000 adjusted income. I never knew that credit was income-dependent.
@MarilynG1I lost my file (I think because I said don't save after I was trying to make changes, and I assumed it had saved the previous version). I just got done entering everything again, except the 1098-T and 1099-Q. But because we had those forms last year, when I switch to Forms, I can see them, but the number fields are blank. Should I delete these? The IRS is going to get them from the school and the 529 plan. I'm not sure if I should enter them and then add in other expenses that weren't listed on the 1098-T? Just so the IRS doesn't come back and ask why we took tens of thousands of dollars (about $10,000 more than what the school put on line 1 of the 1098-T) out of the 529?
Also, since our daughter earned more than $5050 in 2024, I went to Forms and checked that box, because of the huge Roth conversions (more than doubling our gross income), we didn't qualify for the $500 dependent credit anyway, but is this correct to check that box for her income? I can't uncheck the box "Qualifies as other dependent" on the 1040, but she just filed and checked that someone else *can* claim her as a dependent but that we *aren't*. Or does she need to amend her return (which she filed just to get her withholdings back) to say that we *are* claiming her as a dependent (because that's the default, even though we don't qualify for the credit)?
The IRS does not expect to see a 1098-T from you since you don't qualify. They do not expect to see a 1099-Q from you because you used it all on qualified education expenses (although they could audit you and ask you to prove it. So it doesn't matter whether those forms are there or not.
If she claimed herself she would get her withholding back and that would be it anyway. So it makes no difference to her return.
So, I can't tell - the "forms" are there when I go to form view in TT - will they be filed with ) amounts, with our return if I leave them? If yes, should I delete them and how? Everything was copied over (less amounts) from last year's return.
It won't matter if they are filed or not. They don't count towards anything. You can delete them if it makes you feel better but if they have a bunch of zeroes on them they don't matter anyway.
@RobertB4444 OK, I'm confused. According to Table 5 in IRS publication 501, our youngest (under 24 and a full time student who did not pay for more than half her own support in 2024) is a "qualifying child". Yet on my return TT has her marked as "meets qualifying other dependent" not "child". But she earned more than $5050 in 2024. We can't claim the $500 "other dependent" credit because we converted all of our IRAs to Roth in 2024 and that pushed our income over $410,000. She filed just to get her income taxes that were withheld (federal and the state where she worked) back. She filed as a nonresident where she worked (even though she lived in that state all year except for a few weeks when she came to visit us) because she 1. Has a driver's license and is registered to vote in our state and 2. Lived in 3 different places in the second state during the year (2 different dorms and then summer housing while she was working). She filed as a resident in our state and claimed the taxes withheld by the other state (though she didn't have any tax liability in either state). She checked on her federal (and I assume on both states') return that she could be claimed as a dependent on our return, but had not been.
Now, since she is showing up as a dependent on our return and we are not eligible for the credit (why I told her to go ahead and say we're not claiming her), is she going to have to amend her return? Can I delete her from our return by editing our dependents (it still shows her older brother's information in the questionnaire, and we haven't been able to claim him for years, he's over 24 and earns too much to claim as "other dependent" even though he still lives with us)? Or is that going to cause a problem if in 2025 we want to claim her as "other dependent" to get the $500 credit because our income will be less than half of what it was in 2024 (provided we don't start converting 401K money)? As I understand it, she will not be able to claim the AOTC for 2025 even if she doesn't live with us and *does* pay her own rent and living expenses, because she is a full time student under 24 and we have to include the fair market rent of our house and even our grocery and utility bills (divided by 4) as her "support" in addition to what she is actually spending in another state. So even if she paid all her own living expenses those are going to be less than 1/4 of *our* household expenses.
I just don't want to cause a problem for her this year because she said on her return that we are not claiming her as a dependent, and I also don't want to cause a problem for next year (2025 taxes) and beyond by deleting her from our return for 2024 and then adding her back as a dependent in 2025 to get the $500 creidt (even though we will not be eligible for the AOTC because our income will be over $180,000).
1. A child in college that does not support themselves can be claimed as a dependent regardless of their income. They will not qualify for the child credit - too old. This pushes them into the "other dependent credit". If it is not your child, then there is an income limitation of $5050.
2. The filing sounds great with residency and non-residency.
3. Since she has already claimed herself, you can't claim her. Your return will be rejected if you try. Go back into the personal information section and mark that you are not claiming her. My only concern would be insurance. If she is still on your insurance policy, they may require her to be a dependent. That would mean amending her returns, getting a PIN for you to file with her and so on. She can get a pin quickly and that would allow you to have her as a dependent. See Get an identity protection PIN.
4. You can claim her again next year as long as she meets the limits.
If you want to mark that she paid over half of her expenses in 2024, this drops her from your return for this year and then you can edit her back in next year. This is a program thing, it doesn't go to the IRS. It just prevents her from going on your actual tax form.