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1098 -T scholarships exceed tuition/fees. Student made over $6000 during year working. Who pays taxes on this extra scholarship amount?

Forum|Forum|7 years ago
June 6, 2019
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please help us figure this out. We'd like to have our son claim the extra $2000 in scholarships that exceeded tuition/fees because obviously his tax rate is lower. Can we do this? (I've heard that kids pay this at their parents tax rate; hoping to avoid that!)

Student: income 7000$ Age 20; dependent. he's filing taxes and will receive a small amount back.

scholarship amount exceeding tuition/fees: $2000.

Books for two semesters: $700 that arent on 1098t

please clear up how this all works! who pays the taxes on this amount? where do we put it on his tax form? or on our tax form? very appreciated!

Best answer by ChristinaS

The income is always listed on the child's tax return. However, it is also correct that the tax may be calculated at your rate on the child's return (via Form 8615, aka "Kiddie Tax")

In order for this dreaded Kiddie Tax to be an issue, the unearned income (which would include taxable scholarships) has to exceed $2100.

https://www.irs.gov/taxtopics/tc553.html

You simply enter the taxable amount in the education section as a scholarship (on his return). You don't need to enter the 1098-T and go through all the steps. You can if you want, but the only output that matters is that the taxable amount ends up on line 7 of the 1040. All the input with his 1098-T, books, etc.. is unnecessary work just to get a single figure on to his tax return.

C

ChristinaSAnswer

Employee

The income is always listed on the child's tax return. However, it is also correct that the tax may be calculated at your rate on the child's return (via Form 8615, aka "Kiddie Tax")

In order for this dreaded Kiddie Tax to be an issue, the unearned income (which would include taxable scholarships) has to exceed $2100.

https://www.irs.gov/taxtopics/tc553.html

You simply enter the taxable amount in the education section as a scholarship (on his return). You don't need to enter the 1098-T and go through all the steps. You can if you want, but the only output that matters is that the taxable amount ends up on line 7 of the 1040. All the input with his 1098-T, books, etc.. is unnecessary work just to get a single figure on to his tax return.

B

BeKind6Author

thanks. we will add it to his 1040ez form, looks like we can just add it on another line in turbo tax; amount is actually 1935$.

OK, next question - on parents taxes we can still claim the $700 in books that we paid for AOTC, right? we qualify with our income to claim it. Will we also need to report the scholarship overage and the book costs will come off that? or just claim the book costs? thanks christina, you are really helping people!

W

whatusername

If you aren't providing support, why claim as dependent? If scholarships, earned and unearned income provide 100% support except for maybe health insurance....