College student is a dependent of his parents. Rcvd a 1099-T,showing $50,000 in box 1 (tuition exp) and $65,000 in box 5 (scholarship). How is this inputted in Lacerte?

[PhoebeRoberts · Accepted solution]

The easy answer is "$15,000 of taxable scholarships and fellowships" in Screen 14.1 of the child's return. Kid is subject to both kiddie tax and AMT.

[TaxGuyBill]

The not-so-easy answer depends on this: Would the parents qualify for the American Opportunity Credit if there was tuition paid?  If so, do the scholarships/grants allow that money to be spent on non-tuition expenses (most do, including Pell grants)?

*IF* both of the above are "yes", then you probably want to enter $17,000-$19,000 (an extra $2000-$4000) on the child's return, and $2000-$4000 of tuition on the parents' return.

[PhoebeRoberts]

Agreed. You can also dig around for non-tuition components of QEE to reduce the amount taxable to the kid.