My university paid my health insurance premiums directly to the health insurance and states it as scholarship in my 1098 t

[bi6cyhpoyakhnp]

Do I need to pay on these health premiums federal tax?  Do I need to file tax also in Illinois since the university is located there? Can my parents, of whom I am a dependent still claim these health premiums as a deduction even though I am filing my own tax returns? Thank you very much!

[MarilynG]

Your parents can claim medical expenses they paid for you as a dependent on their return.  However, if the school paid these premiums, they would not be able to claim them on their return. 

You won't need to enter any health insurance info on your return.

You don't need to file an Illinois return because of being a student there.  This is considered a 'temporary absence' from your home state.

If the amount of health insurance premiums is included in Box 1 or Box 2 Tuition on your 1098-T, you don't need to make a Scholarship adjustment.  If not, you can adjust your Scholarship amount in Box 5 on your 1098-T to subtract the amount paid for insurance, since this is not a 'qualified education expense'.

Here's info on qualified education expenses:

https://ttlc.intuit.com/replies/3300629

[bi6cyhpoyakhnp]

Regarding filing tax in Illinois: My scholarship exceeded my qualified education expenses so I need to file federal taxes. Don't I need also to file in Illinois since the college from which I received the scholarship is in Illinois? Thank you very much!

[MarilynG]

No, scholarship is not considered earned income for IL.

[bi6cyhpoyakhnp]

Thank you but just to make sure my question is clear: I received an excess scholarship from a college in Illinois. It shows on my 1098. This excess scholarship is taxable by federal tax as unearned income. Since the college is in Illinois, then does it mean that the source of this excess scholarship is in Illinois, and therefore taxable by Illinois?

[smtex2021]

I see you posted this a while ago but wanted to ask if you ever figured it out. Similar doubts here.

[Hal_Al]

Q. Do I need to pay on these health premiums federal tax?

A.  Yes.  Scholarship $ used for anything other than qualified educational expenses (tuition, fees, required course materials ) is taxable income to the student.  The fact that it's reported on the 1098-T makes it simple; but the health insurance  would be taxable even  if not on the 1098-T.

Q. Do I need to file tax also in Illinois since the university is located there?

A.  No, it's taxable in your home state, since it's not earned income.

Q.  Can my parents, of whom I am a dependent still claim these health premiums as a deduction even though I am filing my own tax returns?

A. No, because they didn't pay it. 

[Hal_Al]

A.  Yes.  Scholarship $ used for anything other than qualified educational expenses (tuition, fees, required course materials ) is taxable income to the student.  The fact that it's reported on the 1098-T makes it simple; but the health insurance  would be taxable even  if not on the 1098-T.

Q. Do I need to file tax also in Illinois since the university is located there?

A.  No, it's taxable in your home state, since it's not earned income.

Q.  Can my parents, of whom I am a dependent still claim these health premiums as a deduction even though I am filing my own tax returns?

A. No, because they didn't pay it.