1098-t

[barbgreenx]

Hi Everyone

Client has a 1098-t for their dependent. After entering everything ProSeries is showing that the taxpayer doesn't qualify for the AOTC. Is that because the box 1 tuition is $14,304 and box 5 for scho/grants. It indicated that the taxable amount is $4455. If this is true how does it flow to the 1040. Not sure how this to complete this in ProSeries. Please help thank you in advance

Barbara G

[TaxGuyBill]

If scholarships/grants are more then the qualified tuition/fees, the excess scholarship/grants are taxable on the STUDENT's return.

IF the scholarships/grants are allowed to be used for non-tuition (for example, Pell Grants allow that), that it is an option to intentionally make $2000-$4000 MORE of the scholarships/grants taxable on the student's return.  Doing that will allow that $2000-$4000 to be applied for the American Opportunity Credit on the parents' return (if all other qualifications are met).

The 'warning' about doing that is if the student has other income, that could make some (or all) of the taxable scholarships subject to Kiddie Tax.

[barbgreenx]

Thank You for your response Tax Guy Bill

My clients dependent had no income. The parents taxable amount from the 1098T is $5455. Is this now taxable to the parents. If so where do I enter it in ProSeries?

Barbara G

[TaxGuyBill]

My original answer still applies, except that Kiddie Tax won't apply because there isn't other income.