Today TaxMama® hears from Sheba in the TaxQuips Forum, who needs guidance. “My daughter is a first year college student out of state. She has a partial loan, partial scholarship and grants. I don’t know what to do with the information from the 1098-T. I still claim her as a dependent and I pay part of her tuition, too. What form do I use for her, or should I just include it all in my own taxes.”
Hmmmm… I am not sure, especially since I don’t know all the details and how the grants were issued or for what they were used.
May I recommend that go to a VITA center and have them help you with your daughter’s tax return? Will your daughter be back before April 15th? She will need to go with you, since you cannot sign for her. You can get free assistance and show them all the details.
Since you have been paying the tuition, it’s quite likely that you can include the costs in your own tax return for either the American Opportunity Credit or the Tuition and Fees deduction.
But if any of the grants or scholarships your daughter received went towards covering living costs or anything other than tuition, books and supplies, it’s possible that some of the scholarships or grants may be taxable. In that case, it might be more advantageous for your daughter to pick up the costs.
I wish I could give you a more definitive answer. But something on that 1098-T may require that your daughter report something on her tax return. Without seeing it, I have no idea. That’s why I recommend that you have someone look at it – and your tax situation and your daughter’s.
If your income is too high to qualify for VITA, and you’re too young for the TCE program (under age 60), you can turn to online tax software. All three of the bigger providers will answer specific tax questions for you. Just upload the documents so they become part of the tax return file. AND their support folks can see it, and they will answer you and give you guidance IF you call and ask for it (via chat, email or phone).
And remember, you can find answers to all kinds of questions about education costs and credits and other tax and business issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
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