Tuition statement w/Grant - still a dependent

[tilt53]

Taxpayer is still a dependent, not yet in a degree program. 1099-T box 2 = 35,937. Box 5 = 10,508. Boxes 7 & 9 are checked.

When I fill out the 1099-T Worksheet in ProSeries, it shows that the 10,508 is taxable. The parents are high income. The 10K does not seem to show anywhere on the parent's return.

The actual question: since she is a dependent, this still goes on the parent's return, doesn't it? If it put it on her return, yes, it shows taxable on line 7 with SCH 10508 printed next to the line.

I'd appreciate some clarification. Thank you.

[solomon]

Do you mean 1098-T? Describe the box descriptions.

[tilt53]

Oops, my typo

1098-T

Box 2 - Amounts billed for qualified tuition......$35,937
Box 5 - Scholarships or grants.....$10,508
Box 7 - Checked - Check this box if the amount in box 1 or 2 include amounts for an academic period beginning Jan-Mar 2009
Box 8 - Checked - Check if at least half-time student.

Again, my understanding is that because she is a dependent, this is reported on the parent's return.

[Kram BergGold]

Tuition

First,
The amount in box 2 is often times useless. You need to know how much was actually paid by 12/31/08. Once you have this amount you reduce it by the $10k. If it is a positive amount there is nothing to report as income. As a matter of fact your client may be entiltled to an Ed Credit or deduction .If it is negative there may be an amount to report on the kids return.

[tilt53]

Thank you. I'll ask a few more questions of the client.

One more question. This definitely gets reported on the parent's return, correct?

[Gretel]

If the result is additional income it would be reported on student's tax return.

If education credits are taken either parent or student can report.

[AJsTax]

If the result is additional income it would be reported on student's tax return.

If education credits are taken either parent or student can report.

Only if the parents elect not to claim the exemption for the student can the student claim their own educational credits. If so elected the student can claim the Hope or Lifetime education credits and qualifying student loan interest. But in that case no one gets the dependency for the student. The student can not her own exemption or fees and tuition deduction. Most times the loss to the parents would be much higher than the gain for the student.