As stated, I am trying to help my son with his taxes and due to being a student under 24 not paying more than half his way, his tax form via Turbo Tax online is asking for my Schedule D info from the Dividend and Capital Gain work sheet. I went into my filed form and it is no where to be found. I didn't have any gains or losses to file so I tried to just use zero but for the line 15 question says it must be greater than zero. We never had to do this before for him using our info. Can anyone help me find where in the world that form is?
What is even weirder is this is all falling under the section for Childs income under 24 and its having us complete this as form 8615 "tax for certain children who have unearned income". He has no child and he has income documented via his w2 and a 1099-nec. Both inputed. I am so confused. I am now 5 hours into this debacle which should be less than an hour process. Can anyone help us?
Your son is the child. Form 8615 is for tax on his own unearned income, not his child's unearned income. (The "Tax for Certain Children Who Have Unearned Income" is commonly called "kiddie tax.")
Does your son have any income other than a W-2 and a 1099-NEC? If not, he has no unearned income, so you shouldn't even be in the Child's Income section. If he did have other income, what are the types and amounts? Unearned income is basically any income other than from working. Some examples are interest, dividends, capital gains (including capital gain distributions), and taxable scholarship income.
It's possible that you entered the 1099-NEC as unearned income instead of as self-employment income. If so, that's probably not correct. What is the 1099-NEC income from, and what is the amount?
If you did not have any capital gains or losses, you would not have Schedule D in your tax return. In that case, leave all of the Schedule D boxes blank. However, if you have an amount on Form 1040 line 7 and the box next to that amount is checked, that is capital gain distributions from Form 1099-DIV box 2a. Enter that amount in the box labeled "Schedule D, Line 15 OR Qualified Div/Cap Gain Wksht Line 3."
Thank you so much for the reply. He only has his W2 and a $700 payment from a non-profit for teaching a course over the summer as the 1099-NEC. He did also get a 1098-T from the college for his scholarship for $4448.00 that we entered as well. So I bet that scholarship is the "unearned" income. Didn't even think of that! I will check the 1099-NEC in the morning as to how I entered it.
And yeah I had no capital gains or losses and that box is NOT checked on my 1040. So if we do need to fill in the "kiddie tax" section due to his scholarship...ill leave those fields blank.
Also for the 1099-NEC, he uses his name as the business and the address as his own correct?
Really appreciate the help! 🙂
1098-T for your dependent is reported on your tax return, not his.
@Rick Dizzle wrote:
Also for the 1099-NEC, he uses his name as the business and the address as his own correct?
Yes, that's correct. And if you're talking about the business name and business address, then it sounds like you entered the 1099-NEC correctly as business income, which is earned income.
Does the 1098-T show any tuition in box 1, or just the scholarship in box 5? If there's no tuition, that would make the entire scholarship unearned income. But there might be some tricks you can play (legally) with allocating the scholarship income between you and your son, depending on the terms of the scholarship. There's another Champion in the Community who knows a lot about this. Let's see if he can help. @Hal_Al, can you comment on this, and how to handle it in relation to the kiddie tax?
Thanks for reply. I already filed my taxes and he got the 1098-T for his school. So why would I file it on my taxes? So doesn't he not document it? Do I need to revise mine now?
Yes shows 1555.00 in box 1 for tuition paid. I am super confused as to why I would need to file his 1098-T on my taxes. Should I just leave it off his?
Taxable scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $13,850 filing requirement and the dependent standard deduction calculation (earned income + $400). It is not earned income for the kiddie tax and other purposes (e.g. EIC).
So, if his total income is more than $13,850, the taxable scholarship will trigger the form 8615 requirement.
Q. He got the 1098-T for his school. So why would I file it on my taxes? So doesn't he not document it?
A. If needed the 1098-T can be filed on both the student's and the parent's return, with adjustments.
There is a tax “loop hole” available. The student reports all his scholarship, up to the amount needed to claim the American Opportunity Credit (AOC), as income on his return. That way, the parents can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship. You cannot do this if the conditions of the grant are that it be used to pay for qualified expenses.
Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.
Books and a computer are also qualifying expenses for the AOC. So, extending the example, the student had another $1000 in expenses for those course materials, paid out of pocket, she would only need to report $5000 of taxable scholarship income, instead of $6000.
Ok so if he has if he has 17765.00 in income via his W2 and the 1098-T had 1555.00 in box 1 and $4448 in box 2 and nothing in any other box, and I have already filed and received my return, what is the correct course of action? Should only he file it, do I "NEED TO" amend mine or should we do nothing?
Q. Ok so if he has17765.00 in income via his W2 and the 1098-T had 1555.00 in box 1 and $4448 in box 5
A. Only he should file to report the scholarship income and the kiddie tax form 8615.
You don't "NEED TO" file an amended return. But you have the option to file an amended return to claim the $1555 of tuition (plus any "course materials") for the tuition credit. The American Opportunity credit (AOC) is 100% of the first $2000 of tuition and qualified expenses and 25% of the next $2000. So, you're looking at a possible $1555+, in hand. If you do, then he will report the full $4448 as taxable income, rater than just the $2893 difference between boxes 1 & 5. Only half time (or more) undergrads are eligible for the AOC.
Thank you. This is starting to make sense.
So just to ensure I have clarity on this.
He will enter his w2 like normal, his 1099-NEC like normal and then HE will enter his 1098-T with all the values ok the form on his Turbo Tax. Then when it takes us to the section of needing to enter my info and my capital gains and losses, this is what the system is using to determine if he is eligible for the "kiddie tax" and that is what creates the form for the kiddie tax?
Then if I want to get money back I amend my taxes and put in his 1098-T on mine?
Am I correct here @Hal_Al ?
Q. Then if I want to get money back I amend my taxes and put in his 1098-T on mine? Am I correct here?
A. Yes.
Q. He will enter his w2 like normal, his 1099-NEC like normal and then HE will enter his 1098-T with all the values ok the form on his Turbo Tax.?
A. Yes. If you decide to make all his scholarship taxable, so you can claim the AOC, then the easy way to enter the 1098-T, on his return, is with box 1 blank and $4448 in box 5.
Q. Then when it takes us to the section of needing to enter my info and my capital gains and losses, this is what the system is using to determine if he is eligible for the "kiddie tax" and that is what creates the form for the kiddie tax?
A. Yes. When it asks for your info, it has already determined that he is "eligible for the kiddie tax". Your info is used to calculate his tax on form 8615.
Last question so I will do what you mentioned as making his taxable by not entering the box 1 info on his taxes. What info do I use from his 1098-T in my ammendment and does turbo tax allow me to do this pretty easily?
Q. What info do I use from his 1098-T in my amendment?
A. You enter the 1098-T.
Q. Does turbo tax allow me to do this pretty easily?
A. No. So, you should use the same essential short cut, that you use on your son's return: Enter the 1098-T with $1555 in box 1 and box 5 blank*. If you have any books expenses, for simplicity, just add that cost to box 1 (there is a place to add book costs in the interview).
*The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or possibly your student has taxable scholarship income.
If you claim the tuition credit, you do need to report that you got one (the TurboTax interview will handle this)
You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. In the 1098-T screen, click on the link "What if this is not what I paid the school" underneath box 1. You will then be able to enter the actual amounts paid. You will also reach a screen that allows you to adjust the scholarship amount for "amounts not awarded for 2023 expenses".
Or if you find it easier, just change the numbers in boxes 1& 5 to what your records and/or calculations show. The 1098-T that you enter in TT is not sent to the IRS.
So since I already filed and got my return..can I amend through turbo tax or do I need to go another route?
You can amend your return directly on TurboTax. You will have to wait until your original return is processed before filing the amendment. The program will guide you through the process and the only thing you would need to enter is the Form 1098-T and education expenses you want to add.
To add Form 1098-T on your return in TurboTax Online:
To add it in TurboTax Desktop:
If you would like more information about amendments and education credits see the following TurboTax help articles:
See the following FAQ for instructions to amend your tax return with TurboTax. (The FAQ says "prior year" but it also works for 2023.)
How do I amend my federal tax return for a prior year?
Since you have already received the refund from your original tax return, you can file the amended return anytime. It currently takes the IRS 20 weeks or more to process an amended return.
I went into his return and removed box 5 on his 1098-T and added his books to line 1. It reduced what he owed from almost 700 down to 370. Will he get in trouble for not including his scholarship from box 5 on this and will I have an issue not including it on mine? Want to make sure before I finalize his. Thank you all!!
Also in trying to amend mine...I can't claim an education tax break..looks like I make too much.
So I will do all I can to help him.
Just will need clarification since I am only filing the 1098-T on his taxes. Am I truly good JUST to fill in line 1 with his books added to that and leave line 5 blank for his scholarships?
Q. Am I truly good JUST to fill in line 1 with his books added to that and leave line 5 blank for his scholarships?
A. No. You can not do that on his return. That only works as a short cut on you return, if you were eligible for the AOC, which we now know you are not. He has to enter the 1098-T, as is, and pay tax on $2893 of scholarship. He could enter his book expense, in box 1 (or later in the interview) to reduce the taxable scholarship.
Q. "So I will do all I can to help him."
A. That's going to be of limited benefit. We can get that $700 down to zero, on his return, by having him to claim the non-refundable portion of the AOC tuition credit. But then the parent must forgo claiming the student as a dependent, and the $500 dependent credit. To do that you're going to have to file an amended return to remove him as a dependent.
The AOC is limited to being claimed 4 times in a student's undergrad years. You may not want to waste one on a $200 savings (the max value is $2500).
Let me know if that's what you want to do and I'll explain how to enter it.
I have already claimed him and recieved my refund. So looks like he needs to fully fill in the 1098-T. So he will fill in box 1 and box 5 as the statement lists and then add in the books in that section. Is that correct?
Q. I have already claimed him and received my refund. So looks like he needs to fully fill in the 1098-T. So he will fill in box 1 and box 5 as the statement lists and then add in the books in that section. Is that correct?
A. Yes
Maybe there's a "side" issue. He has a W-2 for $17,765 plus a 1099-NEC for $700. That's $18,465 of earned income. Have you looked at (done the calculations) whether that is more than half his support. Scholarships are ignored in the support calculation.
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