1098T

[MGC94]

My client is 19 and has a 1098t 

box 1 tuition is $15,600

box 5 scholarship $20,369.50

It is causing her to owe... Schedule 1 8R  

Do you have to report the 1098t? 

[sjrcpa]

If scholarships are more than tuition and fees the excess is generally taxable.

Have client get transcript from school for charges and payments for the year.

1098-Ts are often incorrect,

[TaxGuyBill]

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@MGC94 wrote:

My client is 19 and has a 1098t 

box 1 tuition is $15,600

box 5 scholarship $20,369.50

It is causing her to owe... Schedule 1 8R  

Do you have to report the 1098t? 

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Are you asking if you can leave income off the tax return if it causes the client to owe money???

Have you already determined if your client qualifies to be a dependent of her parents?  Depending on the circumstances, it could be beneficial to cause your client to owe MORE money by electing to make more of the scholarships taxable, which could allow the parents to receive an educational credit on their tax return. 

[MGC94]

She does not qualify to be a dependent on her parents return. 

Hypothetically let's say she was able to be a dependent. Are you saying you can put box 5 on the taxpayers return and box 1 on the parents return?  

[ljr]

just curious - how at 19 is she not a dependent? how much money did she make? 

[taxiowa]

Yes you can put a portion of Box 5 on students return if grant/scholarship does not specify that it must be used for tuition.  Pell grants do qualify for this treatment.  As far as student being a dependent you have to make that determination.

[MGC94]

There is no father in the picture. The mother was in a car accident and is on disability only and the disability is less than what the daughter makes at her job.

The older brother use to help pay the bills, but he no longer lives with them.   

[TaxGuyBill]

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@MGC94 wrote:

box 1 tuition is $15,600

box 5 scholarship $20,369.50

Hypothetically let's say she was able to be a dependent. Are you saying you can put box 5 on the taxpayers return and box 1 on the parents return?  

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If the 'child' was a dependent and the parent claimed her ...

Right now, the 'child' has $4769.50 of taxable income and the parent has $0 of tuition for an educational credit.

*IF* the scholarships/grants are allowed to be used for non-tuition (such as a Pell grant), then the child could elect to have more taxable on her return.  The child could have $8769.50 taxable on their tax return, which would give $4000 of tuition for the parents to claim an educational credit.  However, depending on if the 'child' has other income, the Kiddie Tax could kick in.  When that happens, sometimes it would yield the best overall result if the 'child' only claims an extra $2000 (rather than $4000).

See "Coordination with Pell grants and other scholarships" in Publication 970.

https://www.irs.gov/publications/p970#en_US_2022_publink100060350