1098-T: Can Box 1 - Payments Received be reported on my tax return and Box 5 be reported on my daughter's tax return?

Paying for College
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1098-T: Can Box 1 - Payments Received be reported on my tax return and Box 5 - Scholarships or Grants be reported on my daughter’s tax return?

Thanks!

Geo

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1098-T Box 1 is payments received by the school. It doesn’t get reported on your tax return or the student’s tax return. Scholarships and grants received by the student are reported on the student’s tax return, but only if they are taxable. Scholarships and grants used for tuition, certain fees, and course-related expenses (books, equipment, etc.) are generally not taxable and are therefore not reported on the student’s tax return.

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Here is what TurboTax wants me to report on their worksheets (Note the amounts are more specific than my example above.)…

(Sorry the forum software will not allow me to embed images in my post.)

Geo

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** NOTE: I took too long editing my previous reply and the forum would not allow me to save my edits. Therefore, I am posting a revised post in lieu of my previous post. **

I thought Box 1 was all payments for qualified educational expenses received by the school.

According to my daughter’s college, Room and Board are not qualified educational expenses for TY 2019 and therefore not reported in Box 1.

My daughter’s Box 1 is $13,000 and Box 5 is $17,000.

Her Room and Board is $4,000.

Her out-of-pocket qualified educational expenses are $500.

According to TurboTax her taxable income is $3,500.

A number of folks in one of the TurboTax forums claim I can report the following amounts in my daughter’s 1098-T worksheet for my 1040 and her 1098-T worksheet for her 1040 since doing so offers some tax advantages:

Her 1098-T worksheet for her 1040 tax return - Box 1: $0 and Box 5: Any amount $X

Her 1098-T worksheet for my 1040 tax return - Box 1: $13,000 and Box 5: $17,000 minus $X

Does any of the above make sense?

Thanks, again.

Geo

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I think the instructions are asking you to report the money so that YOU can get the AOTC/LLC. A parent who has a dependent student can get a tax credit for QEE paid. For the AOTC, if you pay $4000 in QEE, you may get a $2500 credit. Turbo tax asks for the 1098 amount but then asks “is that correct” and you can say NO, not correct and fill in the correct amounts.

If your daughter had taxable scholarships, she’d report that on HER return.

There may be qualified expenses NOT reported on the 1098-T, such as books and supplies or extra scholarships received. You also have to decide which tax year you want to include the items in. I kept all payments and scholarships in the tax year for the semester PAID, not reported (so the spring scholarships were in the next tax year, even though the scholarships were awarded and posted in Dec for the spring) and the 1098 was NEVER correct for the 10 semesters and 5 tax years my kids were in school.

You can also report some of the scholarships as taxable to your daughter and then count that amount toward the AOTC credits for your return. Since the new standard deduction is ~$12600 (I think that’s it for this coming year), your daughter might be able to make the entire $4000 income to her and not have to pay taxes, but make you eligible for the AOTC - it really depends on her other income.

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Thanks!

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OP is working on 2019 tax returns – the standard deduction for a single dependent will max out at $12,200. For a single dependent in 2020, the max standard deduction is $12,400.

If OP’s daughter is going to declare a significant scholarship amount as taxable, the kiddie tax (IRS Form 8615) will likely come into play. It is highly advisable that OP seek local competent assistance with completing the tax returns. Based on OP’s evident lack of understanding, seeking anonymous advice on internet forums is not the way to do this.

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Excellent advice that I will follow, but in the meantime, I still look forward to new and different ways to look at this.

Geo

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Actually, after re-calculating the Standard Deduction for my Dependent daughter using Table 8 - Standard Deduction Worksheet for Dependents, I have confirmed that her Taxable Income and AGI are $350 less than her Standard Deduction… By design, mind you… Thus avoiding the Kiddie Tax.

If you think I may be poised to stub my toe somewhere else, please raise the issue.

Thanks!

Geo

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Any really useful and competent specific tax assistance could only be provided after reviewing all of the relevant documents and numbers. My advice is to have a trusted local tax professional do this for you.

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