TWO FORMS 1098-T

[HOPE2]

Hi to everyone.

The client’s son is 19, a student, and has two 1098-T forms from two colleges, as well as a W-2 with earnings of around $4,200. One 1098-T shows only the tuition amount, with no scholarship information, while the other shows $12,000 in tuition and $19,500 in scholarships in Box 5. Can I apply the first 1098-T to the client’s tax return to get AOTC and the second one to the son’s tax return, along with his W-2?

Thanks for help!

[dkh]

No        If parent's claim the student then all education expenses are reported on parent's return

This information is in the instructions for F8863

[BobKamman]

I think the poster knows that, since the reference is to "the client's son" and then asks about the client's return.  I would want to know more about what semesters were covered by each statement.  Did the scholarship cover a previous or forthcoming year?  

[Terry53029]

A lot of the 1098Ts I see are not very accurate, and I ask the client to see the school transcript which is accurate. Also need to know if the scholarship is restricted to tuition only, or can it be used for other school expenses. 

[dkh]

Isn't HOPE2 asking if  parent's can claim one 1098T for an education credit and the student claim the other 1098T for an education credit ?            

[HOPE2]

Thanks@dkh. Parent claim his son on his return, if parent take one 1098-T which does have only tuition amount because of taking some course in college, client able to take AOTC and since the other 1098-T from university does have scholarship more than tuition amount so if this one goes to client return may client face to more income. no other expenses exist for computer and books.

[TaxGuyBill]

How much is the total/combined tuition?

How much is the total/combined scholarships?

You need to find out exactly what the scholarships/grants are, and if allowed to be used for non-tuition (a Pell grant is allowed to be used for non-tuition).  If there are multiple scholarships/grants, you need to find out that information for each one separately.

When you have those answers, we can probably tell you the optimal way to report it.

[BobKamman]

If scholarship exceeds allowable expenses (which usually only happens with football players), it's not the parent who pays tax on the excess; it's the student.  

[HOPE2]

Thanks@TaxGuyBill

first 1098-T info:  $660 for box 1

second one info :  box 1 is  $12600                and breakdown of box 5 is : $7500 college Grant 

and Federal Pell grant is : $12000

son has a W-2 as well $4200

[TaxGuyBill]

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@HOPE2 wrote:

first 1098-T info:  $660 for box 1

second one info :  box 1 is  $12600                and breakdown of box 5 is : $7500 college Grant 

and Federal Pell grant is : $12000

---

If we assume Boxes 1 are correct, there is $13,260 of tuition and $19,500 of grants.  That means there is $6,240 of excess grants.

If the parents qualify for the American Opportunity Credit, the parents can claim $4000 of tuition and the kid would claim $10,240 ($6,240 of excess grants plus the $4000 the parents are claiming) of taxable scholarships. If you want to avoid filling out Form 8615 for the kid, you can slightly lower those amounts so the kid's income is under $14,600 (the 'regular' Standard Deduction).

[BobKamman]

@TaxGuyBill  Sounds like you must have had that question before.  I'm glad it was you and not I.  So, not to change the subject, but can I change the subject?  What would you do with this:

Schoolteacher pays $10,000 tuition to university (working on a masters degree, paying with a student loan, hoping to eventually have it canceled but who knows).  

University gives teacher a $3,000 "tuition waiver" for mentoring a student teacher in her class.  The $3,000 can be applied only to tuition.  If no enrollment in classes, no cash payment.  

University issues a 1098-T for $10,000, and a 1099-NEC for $3,000.  

(I'm not sure if $10,000 was the gross tuition amount, or net after the $3,000, but it doesn't make any difference for Lifetime Learning Credit.)

Teacher is in a 12% bracket so reporting the $3,000 as "other income" might avoid CP-2000 wanting tax plus SE tax on it.  

[HOPE2]

@TaxGuyBill Thanks a lot

I am confused.

I have two forms in hand. Each form should be entered into ProSeries one by one. What should I do for the first 1098-T that has an amount in Box 1 ($660)?

And what should I do with the second one, which one has box1( $12600) and box 5 ($19500)?

Already son's W-2 entered on son's return. And parents claimed son (19 years and student) on their return.