1098T- Box 5 exceeds box 1

[Hal_Al]

Q. Should I claim him as a dependent?

A.  The previous answer was yes. But that was before I knew about  his $19, 249 wage income.  It's probably still yes, but that is not readily obvious. The AOTC will be $2500 on either his  return or yours. 

A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:

1. He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled
2. He did not provide more than 1/2 his own support. Scholarships are excluded from the support calculation
3. He lived with the parent (including temporary absences such as away at school) for more than half the year

   So, it doesn't matter how much he earned. What matters is how much he spent on support. Money he put into savings does not count as support he spent on himself. The support value of the home, provided by the parent, is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants.

   The IRS has a worksheet that can be used to help with the support calculation. See: http://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf

   Scholarships and support  https://ttlc.intuit.com/community/college-education/discussion/re-calculating-support-with-scholarsh...

[Momof2boyz]

Thank you so much again, @Hal_Al. When I ran the numbers on his return with him listed as an independent, it would not allow for the AOTC for him. I assume this is because the "scholarship amount exceeds tuition." 

[Hal_Al]

For him to get the AOTC, you have to enter the numbers differently.

This thread is now spread over two pages, with too many numbers to go back and look. so remind me of the facts:

Box 1 of the 1098-T

box 5 of the 1098-T

Any books and computer expenses

[Momof2boyz]

@Hal_Al 

Box 1:  $11, 116.44

Box 5:  $20,804.00

Total Wages:  $19, 249.26

Books:  $409.45

Thank you!

[Hal_Al]

If not being claimed as a dependent, enter the 1098-T, exactly as received, on the student's return. Enter book  expenses separately.  When asked if any of the scholarship  was used for room and board, answer yes. Then enter $13,279* in the pop up box. R&B are not "qualified educational  expenses".  So, this is how you tell TT that it is taxable. Note the wording at that screen “or other expenses”. You didn’t have to literally use the scholarship for R&B.  This will put the taxable scholarship on line 8r of Schedule 1. 

*20804 -11116-409 =9279 of the scholarship is already taxable. By making $4000 more taxable (9279 + 4000 = 13279), we free up $4000 of expenses for the tuition credit.  TurboTax will automatically give him the credit.  

Note: if you decide that  he cannot be your dependent, there is an important question in his personal info section that must be answered correctly to get him the full $2500 AOTC: more than half his support comes from his earned income. 

If you encounter a  screen called "Amount used to calculate education credit" (or similar wording).  Be sure the amount in that box is $4000.  That screen  doesn't always come up. 

[Hal_Al]

Last reply edited.

@Momof2boyz 

[Momof2boyz]

@Hal_Al 

Thank you!

Yes, this has precisely been the case for me. I have not been getting the "Amount used to claim the tuition credit" or "Education Expenses used for a Tax Credit" screen on his interview, so thank you so much for the workaround methods and info about checking the worksheets. I had definitely answered the question correctly about more than half of his support coming from his earned income on that end.  Hopefully, I can finally get this resolved with all of your help.  I can't thank you enough for all of your assistance!

Thank you again!  I'm going to use all of your suggestions and see what happens next. 

[NateBB]

Piggybacking on the previous questions, what if the amount in Box 5 includes a taxable reduced tuition amount (as he is an undergrad) for two different tax years?

The amount in our box 5 is $11,192. However, $4,823 of this is for TY2024 and the remaining $6369 should be for TY2025. For whatever reason, the university brought forward the tuition reduction credit in 2024 even though we are not paying his tuition for the term beginning in Jan 2025 until Jan 2025.

I understand how I can shift part of this amount into my son's income thereby increasing the amount of the tax credit for myself. However, shouldn't this taxable reduction in tuition categorized as a Scholarship/Grant for 2025 be declared in 2025 instead of being declared as income in 2024 for my child?

Thank you.

[KrisD15]

Yes, if you are saying that in 2024 6,369 posted in Box 5, but the tuition that this will cover is for the first three months of 2025 and the tuition for those three months are not on Form 1098-T, yes you can allocate that 6,369 to 2025.

If entering in TurboTax, use the option of "Part of the scholarships in Box 5 are not for 2024" however if you are not applying for an education credit, and the turion is all covered by a tuition reduction, and there is no excess scholarship, you needn't enter Form 1098-T.  

Keep in mind that next year the 6,369 on the 2025 1098-T for the tuition your allocating to this 6,369 cannot be claimed a second time. 

Box 1 on the 2025 1098-T would need to have Box 1 reduced by 6,369. 

Keep a copy of the school statement with the student's tax file. 

[Hal_Al]

@NateBB 

You say that the box 5 amount includes 2025 scholarship. You don't say whether the box 1 amour includes  2025 scholarship. You also don't say how much us in box 1. 

Q. Shouldn't this taxable reduction in tuition categorized as a Scholarship/Grant for 2025 be declared in 2025 instead of being declared as income in 2024 for my child?

A. Yes. As @KrisD15  said, you will also reach a screen that allows you to adjust the scholarship amount for "amounts not awarded for 2024 expenses".  Enter the $6369 there.  That takes it out of the picture. 

[NateBB]

That is correct. Box 1 only includes what I paid in 2024 but box 5 $11,192, includes the amounts for 2024 ($4,823) and 2025 ($6,369). This latter amount of $6,369 is credited in the university billing statement for a January 2025 term which was paid in January 2025.

I am not seeing a question in TurboTax asking if any of the Scholarship is for another tax year. Where would I find that? I only received the question asking if any of that $11,192 was already reported on Form W-2 or Form 1099-Misc.

You stated that I would need to reduce the amount in 2025 1098-T Box 1 by this amount. Why would I not increase the amount in 2025 1098-T Box 5 instead? 

[NateBB]

My 2024 1098-T Box 1 is $10,944. While Box 7 is checked, this amount only reflects what I actually paid after the $4,823 reduction in tuition was applied. I'm assuming this is because a few of the items that make up box 1 include not just tuition for that particular term in 2024 but also for fees (building, matriculation, etc) that are included for the entire 2024-2025 school year. 

[NateBB]

Where exactly can I find this question asking if any of the amounts in 1098-T box 5 are for a different year? I have gone through every screen multiple times and it does not show up.

[KrisD15]

Get to the "Here's Your Education Summary" screen

Select "Scholarships/Grants (for all schools)"

"Did you Receive a Scholarship or Grant in 2024?"  If you have an amount in Box 5, that will show on this screen

CONTINUE

Next screen asks "Did your Aid Include Amounts Not Awarded for 2024 Expenses?"

Select "YES"

Enter the amount for a different year

[NateBB]

Ok, thanks. I had a brain fart there. Thanks again for your assistance!