Dependent child student and filing

[dvail2180]

Hello,

Looking for some help please after reading many of the q&a related to full time students and tax filing.  Our daughter is 21, a full time student and meets the criteria to be a qualifying dependent on our joint return.  She has never filed a return (earned/unearned income thresholds not met).  She received a 1099-MISC for $2,000 in 2024 (scholarship).  Since that puts her over the $1,300 threshold and requires her to file this year, does she include the 1098+1099's on her return but check the box that she can be claimed as a dependent on our return?   And, does the AOC now get claimed by her and not us?  To summarize, it seems that everything pertaining to college will be included on her return this year and we simply claim her as a dependent.  I appreciate the help!

Dan

[KrisD15]

No, you still use Form 1098-T to claim an education credit if you are eligible. 

You can apply the 2,000 scholarship against the expenses you claim, although that is not required and would not be advantageous. 

The 2,000 1099-MISC does not put the dependent student over the filing threshold since scholarship income is treated as earned income when computing the filing threshold. The student would not be required to file if that is her only income. 

If you also have a 1099-Q showing a distribution form a savings account, that distribution can be applied to room and board. 

Pub 970

[dvail2180]

KrisD15,

Thank you for the quick reply.  Turbo tax lists "taxable scholarships" in the unearned income category for Child's Income, so I appreciate the clarification.  To make sure I understand correctly, if she does not file based upon income limits, I can include the 1098/1099's in her name on my return?  Thank you!

Dan

[BrittanyS]

Yes, if you are claiming her as a dependent and she did not claim the education credits with the 1098 information on her return, you can claim the forms on your return.  You child must be claimed as a dependent on your return to claim the education credits.  The 1099-Q is only reported if there are any non-qualified distributions.  

TurboTax provides the following information on 1099-Qs, "The person or entity who manages the education program typically reports annual distributions on Form 1099-Q to the IRS and to the beneficiary of the education savings account. However, the account owner (such as a parent) will receive the 1099-Q instead if the distributions from a 529 plan aren’t made directly to the beneficiary or to an educational institution for the benefit of the beneficiary.

When the beneficiary enrolls in school and starts taking distributions to pay school expenses, the account manager will begin sending Form 1099-Q each year. And as long as the distributions are used to pay only qualified education expenses, the recipient doesn’t pay income tax on the distributions."

See the links below for more information:

• What is a 1099-Q
• 1098-T