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Level 2
February 26, 2021
Question

1098-T and Scholarship exceeds Tuition

  • February 26, 2021
  • 1 reply
  • 10 views

Dependent child has athletic scholarship and receive Form 1098-T with box 5 Scholarships of 30,541 and box 1 payments of 12,760. Does this set off the kiddie tax? Child has 2 W-2s and 1099-NEC and must file. Thanks!

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1 reply

February 26, 2021

If the 1098-T is accurate in the amount of tuition and the amount of scholarships received, yes, the child will be subject to the Kiddie Tax.

Be aware there is a horrible error in ProSeries in regards to the Kiddie Tax.  You need to open up some Kiddie Tax capital gain/Schedule D worksheet (even if Schedule D does not apply) in order for the program to correctly calculate the tax.