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I claim my son as a dependent. He has a taxable scholarship. Do I claim that income on my return or does he? He has other income and files a return.
My son is in college. I claim him as a dependent on my return. He received a 1098-T. He received more in scholarships (box 5) than what he had in eligible expenses, resulting in a taxable scholarship. That amount appears on the dependent student information worksheet but that amount did NOT flow through to Form 1040 Line 7. My son had other income also an files his own return. Which one of us claims the taxable scholarship amount on their return, the student or the parent?Thank you.
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I claim my son as a dependent. He has a taxable scholarship. Do I claim that income on my return or does he? He has other income and files a return.
It depends on a number of factors. Understand that figuring out who claims the student as a dependent, and determining who claims the education expenses & credits, is two different determinations. It depends on the specific situation as outlined below.
Here’s the general rules gisted from IRS Publication 970 at http://www.irs.gov/pub/irs-pdf/p970.pdf
If the student:
Is under the age of 24 on Dec 31 of the tax year and:
Is enrolled in an undergraduate program at an accredited institution and:
Is enrolled as at least a half time student for one academic semester that begins during the tax year, (each institution has their own definition of a half time student) and:
the student provides less that 50% of the student's support (schollarships/grants received by the student do not count as the student providing their own support)
Then:
The parents will claim the student as a dependent on the parent's tax return and:
The parents will claim all schollarships, grants, tuition payments, and the student's 1098-T on the parent's tax return and:
The parents will claim all educational tax credits that qualify.
If the student will be filing a tax return and:
The parents qualify to claim the student as a dependent, then:
The student must select the option for "I can be claimed on someone else's return", on the student's tax return. The student must select this option ieven f the parent's qualify to claim the student as a dependent, and the parents do not claim them.
Now here’s some additional information that may or may not affect who files the 1098-T. If the amount of scholarships/grants exceeds the amount of qualified education expenses, the parent will know this when reporting the education on their tax return, because the parent will not qualify for any of the tax credits. (They only qualify for tax credits based on out-of-pocket qualified expenses not covered by scholarships/grants.) Also, the parent’s will not qualify for the credits depending on their MAGI which is different for each credit, and depends on the marital status of the parent or parents.
In the case where scholarships/grants covers “all” qualified education expenses, the parent’s don’t need to report educational information on their dependent student at all – but they still claim the student as a dependent if they “qualify” to claim the student.
If the scholarships/grants exceed the qualified education expenses, then the student will report the 1098-T and all other educational expenses and scholarships/grants on the student’s tax return. The student will pay taxes on the amount of scholarships/grants that are not used for qualified education expenses. However, if the student’s earned income reported on a W-2, when added to the excess scholarships/grants does NOT exceed $6100, then the student doesn’t even need to file a tax return, and nothing has to be reported.
If the student has any other taxable income not reported on a W-2, and it exceeds $400, (not including taxable portion of scholarships/grants) then most likely it’s considered self-employment income. That will require a tax return to be filed and the student will have to pay the Self-Employment tax on that income.
Finally, regardless of the student’s W-2 earnings, if any taxes were withheld on those earnings and it was less than $6200, then the student should file a tax return so as to get those withheld taxes refunded.
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I claim my son as a dependent. He has a taxable scholarship. Do I claim that income on my return or does he? He has other income and files a return.
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I claim my son as a dependent. He has a taxable scholarship. Do I claim that income on my return or does he? He has other income and files a return.
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I claim my son as a dependent. He has a taxable scholarship. Do I claim that income on my return or does he? He has other income and files a return.
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I claim my son as a dependent. He has a taxable scholarship. Do I claim that income on my return or does he? He has other income and files a return.
See IRS Pub 17 under qualifying child support test:
<a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p17/ch03.html#en_US_2014_publink1000170907">https://www.irs.gov/pub...>
" A scholarship received by a child who is a student is not taken into account in determining whether the child provided more than half of his or her own support. "
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I claim my son as a dependent. He has a taxable scholarship. Do I claim that income on my return or does he? He has other income and files a return.
You may wish to use the IRS tool at <a rel="nofollow" target="_blank" href="https://www.irs.gov/uac/Am-I-Eligible-to-Claim-an-Education-Credit%3F">https://www.irs.gov/uac/Am-I-...> to see just what credits you qualify to claim. The TT program figures all this automatically for you. But using the tool for piece of mind doesn't hurt.
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I claim my son as a dependent. He has a taxable scholarship. Do I claim that income on my return or does he? He has other income and files a return.
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I claim my son as a dependent. He has a taxable scholarship. Do I claim that income on my return or does he? He has other income and files a return.
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I claim my son as a dependent. He has a taxable scholarship. Do I claim that income on my return or does he? He has other income and files a return.
Edited - Per following discussion, it seems taxable scholarships are earned income for reporting requirements of a dependent child, and unearned income in some other situations.
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I claim my son as a dependent. He has a taxable scholarship. Do I claim that income on my return or does he? He has other income and files a return.
Tuition and other educational credits cannot be claimed by a dependent, but they can be by the taxpayer claiming the dependent if they paid them and otherwise qualify.
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I claim my son as a dependent. He has a taxable scholarship. Do I claim that income on my return or does he? He has other income and files a return.
Unearned income is generally all income other than salaries, wages, and other amounts received as pay for work actually done. It includes taxable interest, dividends (including capital gain distributions), capital gains, unemployment compensation, taxable scholarship and fellowship grants not reported on Form W-2, the taxable part of social security and pension payments, and certain distributions from trusts. Unearned income includes amounts produced by assets the child obtained with earned income (such as interest on a savings account into which the child deposited wages).
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I claim my son as a dependent. He has a taxable scholarship. Do I claim that income on my return or does he? He has other income and files a return.
For Form 8615, “unearned income” includes all taxable income other than earned income as defined later. Unearned income includes taxable interest, ordinary dividends, capital gains (including capital gain distributions), rents, royalties, etc. It also includes taxable social security benefits, pension and annuity income, taxable scholarship and fellowship grants not reported on Form W-2, unemployment compensation, alimony, and income (other than earned income) received as the beneficiary of a trust.
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I claim my son as a dependent. He has a taxable scholarship. Do I claim that income on my return or does he? He has other income and files a return.
"Earned income also includes any part of a scholarship or fellowship grant that is considered gross income."
though it does reference pub 17 for more details, and that pub seems to contradict.
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I claim my son as a dependent. He has a taxable scholarship. Do I claim that income on my return or does he? He has other income and files a return.
Pub 501 - filing requirements for dependents.
<a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p501/ar02.html#en_US_2015_publink1000220708">https://www.irs.gov/pu...>
Earned income. Earned income includes salaries, wages, professional fees, and other amounts received as pay for work you actually perform. Earned income (only for purposes of filing requirements and the standard deduction) also includes any part of a taxable scholarship. See chapter 1 of Pub. 970, Tax Benefits for Education, for more information on taxable and nontaxable scholarships.
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