Tax Year Prior to 2020: 1098-T And 1099-Q sent to Parent & Student, how to handle the student's Tax return while having a scholarship?

Forum|Forum|6 years ago
March 15, 2020
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Both myself and my daughter received 1099-Q, my daughter's distribution went to the college directly. I claimed her/claimed the AOC on my return and entered the 1098-T and the 1099-Q on my return. How should my daughter enter the 1099-Q & the 1098-T if the distribution from 1099-Q went towards the tuition and she had a $3000 scholarship and $ 600 summer income. Does she enter the full amount in box 1 from the 1098-T on her tax return, or just what is paid to the college, or even 0?

Thank you!

Hal_Al

Employee

You situation is basically that TurboTax can't handle it and you have to use a work around (see below*). So, what are your numbers, and somebody can probably show you a short cut.

Box 1 of the 1098-T

Box 5 of the 1098-T

Box 1 of both 1099-Qs

Box 2 of both 1099-Qs

Room & Board (if she lives off campus, even at home, what is the schools charge for R&B)

Books and other course material not shown on the 1098-T

*In box 1, at the 1098-T screen, she subtracts the expenses you claimed on your return for the AOC and your 1099-Q. Then, when she enters books and room & board, she also subtracts the amounts that you claimed on your return,if any.

_____________________________________________________________________

Both the 1099-Q and 1098-T are informational documents. It is not required that they be entered at all. On form 1099-Q, instructions to the recipient reads: "Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution."

You can just not report the 1099-Q, at all, if your student-beneficiary has sufficient educational expenses, including room & board (even if he lives at home) to cover the distribution. You would still have to do the math to see if there were enough expenses left over for you to claim the tuition credit. You cannot double dip! When the box 1 amount on form 1099-Q is fully covered by expenses, TurboTax will enter nothing about the 1099-Q on the actual tax forms. But, it will prepare a 1099-Q worksheet for your records, in case of an IRS inquiry.

NCPERSON1

please post the following and I can explain the math:

1) Box 1 and Box 5 of the 1098T

2) Box 1 and Box 2 for EACH of the 1099Q's. (which one has your social security number on it?)

3) qualified expenses that are NOT in Box 1 of the 1098T. Think Room and Board, Books and Computer related expenses, etc.

NA11Author

1098-T :

Box: 1 is $14758

Box 5: is $3000

1099-Q Parent:

Box 1: $12071

Box 2: $7599

1099-Q Daughter:

Box 1: $3600

Box 2: $2354

Room & Board: $10281

Computer/books: $2450

Thank you!

NCPERSON1

the 1098T goes on the PARENTS tax return and the parent's tax return ONLY as the student is your dependent. Assuming your AGI is less than $160,000 (joint return), you should be eligible for AOTC which is a $2500 credit. To obtain that $2500 credit, it consumes $4000 of expenses (IRS math, check form 8962 for the details).
the expenses remaining to be consumed are a) the 1098T expenses of $14,758 less the scholarship of $3000 less the $4000 used to obtain the AOTC scholarship, so that is $7,758 and then we add in Room and Board expenses ($10281) and Computer / Books of $2450, so we have total expenses remaining of $20,489
we have distributions from the two 1099Q's that total $15,671 (the box 1 entries)
if you look at the instructions section of the 1099Q, it states: Nontaxable distributions from CESAs and QTPs are not required to be reported on your income tax return. You must determine the taxability of any distribution.
Since the expenses of $20,489 exceed the distribution of $15,671, you have determined that the distribution is NOT taxable. And it does not have to be reported on your tax return!
Just keep this analysis and the supporting details with your tax papers.
Delete the 1099Q from BOTH your tax return and your student's tax return.
If your daughter's only income is the $600 and there were no withholdings, she is not required to file a return. (the scholarship remains with the math for the 1098T and does not impact her return)

it's complicated and the TT does the best it can to help you figure out the IRS approach

VictorW9

@NA11 Are you actually referring to two different 1099-Qs and two 1098-Ts? Is it one for you and another for your daughter? A little confused about that because If you are claiming her on your return, why do you want to enter the 1098-T on your daughter's return again?

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