Would like to know if Parent or Student would file using 1098-T

[moyers0913]

Hello,

My son (20 years old) and I both work, plus my son is currently attending college.  My wife and I claim my son on our joint tax return since he's living with us and we support him.

Regarding the 1098-T form, Nathan received University Grants/Scholarships but we paid his tuition for 2020.  So would Nathan and/or myself include the 1098-T form information in our tax return?

Thank you,

Scott Moyer

[AmyC]

The expenses go on the same return as the student. Your dependent, you claim the expenses. However, the magic word, scholarships, that can become taxable income to your son if they are quite large. You may want to look at various scenarios to figure out the best one for the two of you. I am also going to recommend you look at another of my answers for help. 

A short example here:

Box 1 $15,000

Box 5 $20,000

Options are:

• Make $5,000 taxable income and nobody gets education credit
• Mark part of box 5 used for room and board and other expenses,  Pick any number, say $8,000. This leaves $3,000 for education credits to be claimed. $8,000 goes into taxable income. Education credit is claimed on $3,000.

[moyers0913]

Hi Amy, thanks for your reply and I did look at your other article as well.

I'm not sure I understand the phrase "The expenses go on the same return as the student. Your dependent, you claim the expenses."

Are you saying the scholarship money is counted against my son as income on his return, but the tuition expenses would be declared on my tax return?  In which case a portion of the 1098-T gets reported on both our returns.

Of course I'm going to re-imburse our son for any amount he has to pay back.  I just want to keep our returns as simple as possible and not split up the amounts.

Sincerely,

Scott Moyer

[AmyC]

Yes, you get the expenses and he gets the income, provided there are expenses left after the income. Sometimes a student will get so much spending money, the parent is out of luck. The 1098-T would go on your tax return officially, if there are expenses to claim.

Once you figure out how much is taxable to him, if any, then it is added to his return as taxable scholarship income, no form, See Where do I add a taxable scholarship? His tax bracket is low and no tax on the first $12,400 so taxable to him is much better with you getting the education credit, provided you qualify and your income is not too high.

This is an example of pure mud and the IRS allows us to wade around in it. It sounds like you have a good handle and we are here to help.

I had a bunch of links in that other response to help with the wading. Good luck!