College 1098T Form

[jackusername]

Hello everybody,

I'm little lost on my kids college form 1098T. His BOX 1 is what he paid to tuition which is $4000. His BOX 5 is what he received in scholarship and grant, which is $9000. He lives off campus and he used that leftover $5000 which was refunded to him on rent and textbooks and stuff. Am I suppose to include his form that on my tax return or no? He is still dependent. I'm kind of lost on is that $5000 count as income for him? 

[AmyC]

1. Not on your tax return. 

2. Some of it will count on his return. Scholarships can cause taxable income, the amount can vary. You also state that some of the $5,000 went toward educational supplies. You need to find all the Qualified Education Expenses - Internal Revenue Service and enter them into the program as well. Anything the college requires for his course of study.

Next, determine if you qualify to take a credit up to $2500 on your return. See American Opportunity Credit.

Moving forward, you have options for how to handle this income. Options are:

• Box 5 -box 1 -other qualified expenses = amount of income to student and no tax credit for you.
• The other method is to actually increase his income and tax liability a little but dramatically increase your education credit.

So, method 2 is to claim that you paid $4,000 in education expenses and that the scholarship went to room and board and other stuff. That amount of scholarship should cover room and board most anywhere in the country. You can use the college's room and board or if off campus - use their guideline for off-campus living. Living expenses vary widely.

 Pub 970  gives examples.