Can someone assist in clarifying the 1098T/1099Q and American Opportunity Credit

Forum|Forum|1 year ago
March 28, 2025
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I'm looking for assistance with clarifying how to enter these forms.

For example, undergraduate student (single, no children) in first 4 years of college (meets the requirements for the American Opportunity Credit). Student is claimed on parent's return. 1098T box 1 ($3500), box 5 ($6000). Scholarships may be used to pay expenses other than tuition, including room and board. Books payment of $500. Room and board $12,000. The student is also the designated recipient on a 1099Q box 1 ($4000).

1.) On the parent's return, this does not yield any education break, correct?

2.) This scholarship income contributes to 'unearned income' and the student must file a return?

3.) So then, the student reports the 1098T and expenses on their return?

3.) The student (designated recipient) reports the 1099Q on their return?

4.) The health and transportation fees required by the university, (not captured in box 1 of the 1098T) are always considered unqualified payments and not able to be reported, correct?

5.) Is there any way for the parents to capture any American Opportunity Credit?

Thank you!

Best answer by KrisD15

I assume the student is claimed as your dependent on your return.

1. Maybe

Tuition and books were 4,000 and scholarships were 6,000 so the student has 2,000 taxable income from that.

Room and board can offset the distribution only, it does not count to offset scholarships and does not count for an education credit.

No one needs to claim the 1099-Q.

If the student claims all 6,000 of the scholarships, you could have 4,000 towards a credit, which is the max for the American Opportunity Tax Credit. If your Modified Adjusted gross Income is over 180,000 Married Filing Jointly or 90,000 all others, you are not eligible for a credit.

2.No.

If the student claims scholarship as income, he MAY need to file depending on any other income. Scholarship income counts as "Earned" for the filing threshold.

3. No, if the student claims scholarship income, he can enter just the amount he needs to claim, in your case the 6,000.

(You can go to the Education Section under Deductions & Credits, by-pass the entry of Form 1098-T and just enter the amount of scholarship on the "Ant aid not already reported" screen). If he only is reporting 6,ooo scholarship, he will not be required to file a Federal return.

4. Correct, not an education expense.

5. Yes, have the student claim the scholarships.

Enter Form 1098-T in your TurboTax program and go through the interview. Add the books and supplies.

At the end, select "Maximize my tax break" and the program may suggest the student claim the scholarships.

If not, type letme into the search-box

Click the "Jump to letme" link

This takes you to a screen that shows your options and lets you make a selection of what credit you wish to take,

In your situation, don't enter Form 1099-Q. Keep it with your tax file along with receipts for the room and board.

KrisD15Answer