dependant student / 1098 question

Q. How do I add the 1098 taxable amount to her tax return so that it doesn't recalculate the school costs again?

A. There are two answers. First, TurboTax (TT) is capable of handling that.  You enter the 1098-T and follow the interview carefully.  You are allowed to use the 1098-T on both her and your return.

But, you are right to be concerned about the logistics. It can get complicated and mistakes do happen. It's best to use a simple short cut: On her return, enter the 1098-T with 0 in box 1 and $1350 (the known taxable amount) in box 5. Enter no other numbers. The verify the correct output, the taxable amount ends up on line 8r of Schedule 1.

If you're  concerned about TT correctly calculating the taxable amount, reply back with your numbers, including books, course material's and a required computer cost, if any. 

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 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  (or himself, if he is not a dependent) 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 school’s billing statement specifically shows the scholarships being applied to tuition or 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 computers 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.

I am claiming my 20 yr old student and I entered her 1098 info into my return. Turbo says she will need to file a return and report $1350 as taxable income.

I am wondering how I go about this? I don't want to put in the info from box 1 and box 5 again, I already did that on mine......how do I add the 1098 taxable amount to her tax return so that it doesn't recalculate the school costs again, if you know what I mean