Question

Tax Year Prior to 2020: 1098T

Forum|Forum|6 years ago
January 27, 2020
2 replies
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I claim my son as a dependent. He has some taxable income from his scholarship because a small portion was used to pay his room and board. Do we enter the 1098 T form on both of our taxes?

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SusanY1

No. Since he has taxable scholarship income, enter it only ion his tax return. There will not be expenses to claim any credits on yours this year so it won't be necessary to enter it there. Congratulations on his achievements!

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H

h-petrovs

Hi. My son who I claim as a dependent is a full time student and has received a 1098T for 3 years. In 2017 and 2018 I included it in my return. He graduated in May 2019 and his 1098T for 2019 has approximately $300 more in scholarship than tuition. TT is telling me that my son should recognize the income on his return. Since I have included it in my return in prior years shouldn't I do so this year as well? And if so how do I get it into income in TT?

Thanks, Diana

V

VictorW9

Does he have any other income other than the extra $300 of scholarship money? If not, then he will be below the filing threshold. If he has any federal taxes taken out, then he may worth his while filing a tax return and you can still take the credit.

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Hal_Al

Employee

Maybe. First, the 1098-T is only any informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or deduction or possibly your student has taxable scholarship income.

You say he has a small amount of taxable scholarship. If that is his only income, or he has less than $12,200* of total income; he does not need to file a tax return and the simplest thing is to just not enter the 1098-T, on either return.

But, there is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, 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 has $2000 of taxable income and nobody can claim the American opportunity credit. But if he reports $6000 as income on his return, the parents can claim $4000 of qualified expenses on their return. In this case, you do want the student to file a tax return, to document that he reported the scholarship as income.

You can both use the 1098-T to enter the expenses. If you claim the tuition credit, you do need to report that you got one (the TurboTax interview will handle this) Your son should use the 1098-T because it makes entering scholarship income go smoother.

*If your student has investment income of more than $350, and total income of more than $1100, the reporting requirement is different