College student claimed as dependent

[kellyams]

I have a 21 year old full time college student. He received a few W-2s from jobs he has had and a 1098T from college. The 1098T has $13,039 in box 1 and $18,836 in box 5. He made over $15,000 with his W2's.  I am claiming him as a dependent. When he files his taxes, he checks I can be claimed as a dependent as someone else's taxes. He also claims the 1098T, correct as taxable income, correct? 

Thank you!

[KrisD15 · Accepted solution]

Yes, in your situation, since there are no expenses for an education credit, the 1098-T is entered into the student's TurboTax program, as well as his other tax documents, such as his W-2. 

Yes, be sure he selects "Someone else can claim me" and "Someone else WILL claim me"

[VSN7]

Can you please elaborate what you mean by enter "1098-T is entered into the student's TurboTax program"? In my case, Turbo tax told me enter that in our return instead of my son's return. 

[DawnC]

Kris was referring to the above situation where there were no expenses to take credit for on the parent's return (scholarships exceeded tuition).   If you are claiming your son, enter his 1098-T on your return.  @VSN7 

[VSN7]

I did enter that in our return and  Turbotax said not used/applicable in my situation. I don't know why. 

[kellyams]

Are you claiming him as a dependent?

[DawnC]

Your income may be too high.   Was Box 1 more than Box 5 on the 1098-T?   Qualifications for claiming the American Opportunity Tax Credit are:

• You paid an eligible student's qualified education expenses for higher education at any college, university, or vocational school with a student aid program administered by the US Department of Education.
• The eligible student is you, your spouse, or a dependent on your return.
• For the full credit, your MAGI (modified adjusted gross income) is less than $80,000 ($160,000 if you're filing jointly).
  • For a reduced credit, your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you're filing jointly).
  • There is no credit given if your MAGI is above $90,000 ($180,000 if you’re filing jointly).

[VSN7]

yes

[VSN7]

Was Box 1 more than Box 5 on the 1098-T?  yes.  I have 1098-T entered in my return and his return I have entered 529 1099-Q. I also have his W2(<800) and int/div(>2500) on his name. I am running to some weird situation. If I don't choose him as not claimed as dependent his tax is $100 and if choose him as dependent on parent, his tax is $1000. Not able to figure out why.    

[kellyams]

If his scholarship earnings is more than what his tuition cost, he is taxed at his parents percentage rate.

[VSN7]

no. It is only $250. And I also have 529 1099-Q to cover his tuition.

[AmyC]

The 529 is not entered since it is used entirely and I would say it went to room and board rather than tuition. This leaves box 5 scholarship income to be used for tuition. The student can't claim an education credit when parents are claiming so the 109-T is not entered unless taxable scholarship income, which you don't have. The kiddie tax does not come into play since the scholarship is not taxable. His taxes should be very simple with no forms!

Your taxes would have only the 1098-T and the education credit. The IRS has a great brochure that explains how scholarships and tax credits interact.

IRS Publication 970, Tax Benefits for Education states:

If the entire 1099-Q went to qualified expenses, room and board, tuition, etc then you do not need to enter the form. Tuition paid for the first 3 months of the next year also qualify, see page 12, What Expenses Qualify, and page 52 for qualified distributions.

Page 45  repeats: Don't report tax-free distributions (including qualifying rollovers) on your tax return.

@VSN7