What if I'm being claimed as a dependent on my parent's taxes?

[Julie826]

@Carl .................Carl, if my son (who meets the dependency requirements) has an excess of 13k in scholarships, and his 1098T was reported on our taxes, it seems that by his filing a return, we would be paying taxes on that twice, once on our return and once on his.  This is so confusing (I think that's on purpose so they can squeeze more blood out of the turnip.)

[Carl]

If scholarships and grants exceed the "qualified" education expenses, then you will not claim any education expenses on your tax return. The student will claim them. But you will still claim the student as your dependent.
Re-read the above answer very carefully. Only one of you can claim the education expenses, deductions and credits. Period.

[Julie826]

So, to clarify, I did not need to include his 1098-T on my tax return then?  And, his tax due would equal Scholarship Amount - Tuition on 1098T - qualified expenses (books/labs) = Taxable Amount?  Thank you so much!

[Carl]

You are correct. You will still claim the student as your dependent. But the student will report all education stuff on the student's return. Just to make sure you're not using dashes, I'll put it in words.
The student will pay taxes on the scholarship received, minus qualified education expenses paid with that scholarship.

[Julie826]

Thank you.

[dcapano23]

What if the student is a  Full Time Grad student (in Law School) has $16,000 in  scholarships, we can claim him as a dependent and he only made $5,283.00 in 2016  He is filing taxes to get his small refund back.  The 1098-T's are under his name and SS #.  So he will be the one showing this on his taxes correct?

[Texas Roger]

Was he under the age of 24? If not, you can't claim him because he made more than $4050. If he can be claimed as a dependent by you, you are the one who can claim qualified expenses paid out of pocket or with loans for credit. If he had scholarships that paid for non qualified expenses such as room and board, they must be claimed on his tax return. If he can't be claimed as a dependent by you, everything is entered on his tax return only.

[dcapano23]

Yes, he is only 22

[dcapano23]

What if all of the loans are in his name?  His scholarships went all towards tuition

[Texas Roger]

It doesn't matter who actually paid the tuition and fees or whose name the loans are in, the credit is claimed on the tax return of whoever claims the child as a dependent.

[dcapano23]

So one more question.  Do we even show the scholarship since it all went towards law school and no non qualified expenses since he moved back home?

[Texas Roger]

Enter everything that is on the 1098-T. If the scholarship was used for tuition and fees, it will reduce the amount of qualified expenses that can be claimed for credit on your return but it will not be taxable if it was only used to pay for qualified expenses.

[dcapano23]

Thank You Texas Roger You are a life saver