Education Expenses

Forum|Forum|4 years ago
March 24, 2022
2 replies
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My daughter is in Teach for America and taking graduate education courses through a local university. Her tuition on form 1098 - T was paid 3 ways, one by a scholarship from the institutions, one by a payment on a 1099-Misc from Teach for America, and one by a 529 (for her benefit) withdrawal from my account and paid to the institution on her behalf. I don't think I am reporting this correctly, as she is receiving a significant credit even though she didn't pay directly for any of this. Initially, TurboTax thought her payment from Teach for America was "business income," but I don't think that is correct, either, so I deleted it but reported it under Personal Income. I reported the 529 payment on my return and identified her as the receipient of a qualified distribution

Hal_Al

Employee

What does "payment on a 1099-Misc from Teach for America" mean? Is it your understanding that this is a scholarship or something else? What did the student do or promise to do to get this money?

If it's taxable ($ on a 1099-Misc usually are), then the student can claim a credit based on tuition paid with that money

LaughTrackAuthor

Thanks.

Teach for America requires (and subsidizes to some extent) taking a graduate program in Education.

I reported the 1099-Misc as "personal income" for her rather than "business income" in Turbo Tax.

As I have reported it so far, she is getting a credit in excess of her actual outlay (which was zero) as she benefitted from the 1099-MIsc payment from Teach for America, a scholarship from the campus, and a 529 payment made for her tuition from my 529 account for her benefit. TurboTax asked if she received any 1099-Q's. She did not, so I said "no", but I did for that withdrawal (and I reported it on my taxes.)

She is not a dependent.

Carl11_2

Employee

What box on the 1099-MISC is the income reported in? Who's SSN is in the Recipient's SSN box? Yours or hers?

LaughTrackAuthor

Thanks.

Box 3. And the SS # is my daughter's.

Carl11_2

Employee

I don't know if you can enter it on your return with her SSN since she is being claimed as a dependent on your tax return. I'm not sure, but I do believe that your daughter would need to enter it on her own return if you can't enter it on your return with her SSN. Upon initial entry it would be taxable income. Then in the education section she would indicate it was used to pay for qualified education expenses (not room and board) so it's taxability would be offset and cancelled out. Basically, it's treated as a scholarship is, not the same as a 529 distribution.