<p>Assuming your student has a net income on the 1098T, they receive more scholarship and or grant money than the tuition, making the excess taxable.</p>
<p>For argument sake, assume it is $10k. If you report that on the student return and they are independent, the standard deductions pretty much take care of the income so that the student does not pay tons in taxes.</p>
<p>If the same student is a dependent, and you add in a work study, they are going to have some significant tax liability.</p>
<p>Can you report the 1098T income on the parent's return? It seems I have heard this being done, yet I cannot find any place to indicate it is acceptable to do so.</p>
<p>Even if you could (which I doubt you can), why would you? Your student probably is in a lower marginal tax bracket than you are, so it would be cheaper to pay his/her tax on his/her tax return. Granted student income is "taxed" greater by FA formulae, but that does not make up for the bigger difference in income tax rates.</p>
<p>I think you have a few issues to consider. Your tax bracket versus the student's bracket as goalie dad said. Also the dependent issue is, I believe different from the separate tax return issue. The value of a dependent tax deduction also depends on your own income levels. Also a question as to whether the student is over 18, as due to newer tax laws different types of income taxed differently for the under 18 age group. I think the IRS website has some information of the taxation of these type of grants which exceed tuition which you can search at irs.gov.</p>