Daughter and 1098T


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.”

Hi Sheba,

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.

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4 thoughts on “Daughter and 1098T

  1. Suzann says:

    Hi Eva,

    The software will make the choice whether the person goes to VITA or uses another product. However, from what I have learned, the American Opportunity Tax Credit usually wins over the tuition deduction. Have to say, in my grandson’s case, I reduced the total tuition paid on in Box 1 of the 1098T by the scholarship/grant amount on the 1098T Box 5. He was my son’s dependent and we knew the amount was for tuition. VITA is an exceptional service and will work it both ways. I volunteered last year and enjoyed the teamwork and the people we were able to assist.

    Thanks for being there for us Eva,

    Always hugs, Suzann

  2. TaxMama says:

    Thanks Mark, I though AARP’s focus was on those over age 60, since they are involved in the Tax Counseling for the ELDERLY (TCE) program.

    Admdmbm, as it happens, the child IS entitled to pick up their own education expenses, if the parent doesn’t. They can even use the American Opportunity Credit (AOC) up to the amount of the child’s tax liabilty. However, they cannot get the refundable part of the AOC.

    They don’t BOTH get to use the deductions.
    Only ONE person gets the deductions or credit – child or parent.

    Hugs
    Eva

  3. LincMark says:

    There is no age limit for the AARP Foundation Tax-Aide (TCE) program. It is open to all low-to-middle income taxpayers, with special emphasis for those age 60 and over.

  4. admdbm says:

    I’m not a tax pro but I researched a similar issue successfully while reviewing a friend’s tax return…for free. Issue concerned who could deduct the qualifed education expenses where the mom, student-dau and ex-husband split the cost equally (i.e. 1/3 ea)…to my surprise, only the custodial parent (mom) could deduct ALL of the expenses…FWIW.

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