21yo receives $7K in Scholarships, divorced parents

[Karl]

California

Girl is 21 in 2000, full-time undergrad student.

I do the mom's return. She gives me a 1098-T for her 21yo daughter: $0 in Box 1, $7,203 in Box 5.  Has maybe $K of other eligible expenses.

Mom is the custodial parent, but court order allows Dad to claim CTC (or ODC in this case).

Per the IRS ITA "Do I Have to File Tool?" the daughter doesn't have a filing requirement.

Does Mom have to claim this net ~$6,200 in income?

I could see a case for "Dad gets the ODC tax benefit, he should pick up the income" as well as "Mom's household was probably the economic beneficiary of that money."

[BobKamman]

I think you mean she's 21 in 2020.  In other words, she's an adult.  

Have you seen the decree?  Most of them deal only with children (younger than 18, or sometimes through the last year of high school).  Some may include an agreement on who pays college costs, but apparently there are none here.  What support is father providing?

Results may vary for California.  

[TaxGuyBill · Accepted solution]

---

@Karl wrote:

Mom is the custodial parent, but court order allows Dad to claim CTC (or ODC in this case).

Per the IRS ITA "Do I Have to File Tool?" the daughter doesn't have a filing requirement.

Does Mom have to claim this net ~$6,200 in income?

---

Taxable Scholarships go on the STUDENT'S return, not the parent.  So if daughter has other income, the daughter may be required to file.

The ability for the noncustodial parent to claim the child ends when the child reaches the "age of majority" (most states is age 18).

[Karl]

Thank you. I clearly should not be typing these questions in that late at night.

Yes, age 21 in 2020.

And I misspoke.  Mom (my client) says Dad (not my client) is claiming daughter. I mistakenly presumed the divorce decree was still in effect over this.

I don't know how much support Dad is providing.

[Karl]

Thank you, that's what I was looking for, that the scholarship income stays the student's, whether or not student is required to file.  I'll verify no other income.  Much appreciated.