Lanny Posted February 11, 2021 Share Posted February 11, 2021 Today I began working on the 2020 Federal income tax return for DD, in TurboTax. I was ready to stop for today and was on the topic of the I.R.S. Form 1098-T. I had uploaded .PDF files of her I.R.S. forms W-2 and 1098-T for the 2020 tax year, previously. Surprise. The Software asked me if she had received an I.R.S. Form 1098-T for the 2019 tax year. I answered "yes". Then, it asked me if there was an amount in Box 2 or some other box on that form. That's when I ended my TurboTax session for this afternoon... Fortunately, I found the Folder where I have her tax information for 2019 and I have the I.R.S. Form 1098-T on my Desktop and can continue from there, possibly tomorrow. Suggestion: If your DC had received I.R.S. Form 1098-T for 2019, have it available when you or your DC prepare the Federal Income Tax return for the 2020 tax year. 1 1 Quote Link to comment Share on other sites More sharing options...
RootAnn Posted February 11, 2021 Share Posted February 11, 2021 ...And, if like here, the University decided not to issue your student a 1098-T because they didn't think your kid qualified for one, be ready to locate (online or printed) all the statements showing charges, payments, & scholarships from 2020. Also, something I hadn't thought of before, if you are lucky enough to have a kid on a scholarship that includes room & board AND they worked over the summer, it is possible they qualify to not be a dependent of yours. If so, they might be eligible to receive the stimulus payments from 2020. Triple check everything I said above with your tax preparer & tax software. Also, you'll want to balance it with your own tax needs, but here, having my kid claim herself was a clear winner. 1 Quote Link to comment Share on other sites More sharing options...
Lanny Posted February 11, 2021 Author Share Posted February 11, 2021 @RootAnn Not nice of a university not to issue an I.R.S. Form 1098-T. Them not providing that causes a huge amount of work for the student or their parent or their tax preparer to search for that information. As you wrote, Room and Board is probably the biggest expense that is not allowable per I.R.S. regulations. Basically, looking at the I.R.S. Form 1098-T for the 2020 tax year, it is a matter of subtracting Box 1 from Box 5. I believe the difference is what they call "imputed" income? That imputed income can push one from no tax due to tax due, depending on the other income they may or may not have. 1 Quote Link to comment Share on other sites More sharing options...
MerryAtHope Posted February 12, 2021 Share Posted February 12, 2021 4 hours ago, RootAnn said: ...And, if like here, the University decided not to issue your student a 1098-T because they didn't think your kid qualified for one, be ready to locate (online or printed) all the statements showing charges, payments, & scholarships from 2020. Wow! Our cc doesn’t mail one if they aren’t required, but they always have one to access online. 1 Quote Link to comment Share on other sites More sharing options...
8filltheheart Posted February 12, 2021 Share Posted February 12, 2021 (edited) 19 hours ago, RootAnn said: ...And, if like here, the University decided not to issue your student a 1098-T because they didn't think your kid qualified for one, be ready to locate (online or printed) all the statements showing charges, payments, & scholarships from 2020. Also, something I hadn't thought of before, if you are lucky enough to have a kid on a scholarship that includes room & board AND they worked over the summer, it is possible they qualify to not be a dependent of yours. If so, they might be eligible to receive the stimulus payments from 2020. Triple check everything I said above with your tax preparer & tax software. Also, you'll want to balance it with your own tax needs, but here, having my kid claim herself was a clear winner. Actually, RootAnn, the above is not accurate unless things changed within the last 3 yrs. They have to be able to prove they have provided greater than 50% of their support WITHOUT scholarships. Scholarships cannot be used in the independent support calculation. So, if you are providing almost anything--health insurance alone--then it is doubtful that summer employment will be able to demonstrate that they provided more than 50% of their support. We investigated this when our ds was full ride. Since our name was on the title of the car he used and we provided his health insurance, there was no way to demonstrate he was independent. REUs are also considered the equivalent of a grant/scholarship, so students who think they are "working" during the summer get hit with a double whammy if their "job" is an REU bc they will get taxed at whatever the scholarship rate currently is if they face paying taxes.. ETA: I just found the document. It hasn't changed and scholarships canNOT be used to demonstrate support: https://www.irs.gov/pub/irs-pdf/p970.pdf Quote Over age 18 and under age 24 at the end of 2020 and a full-time student (defined below) and your earned income (defined below) was less than one-half of your support (defined below)....... However, a scholarship received by you isn't considered support if you are a full-time student. Edited February 12, 2021 by 8filltheheart 1 Quote Link to comment Share on other sites More sharing options...
RootAnn Posted February 12, 2021 Share Posted February 12, 2021 Arg! That is the opposite of what TurboTax & another parent said. Guess I'll be going through the determining dependency support worksheet instead of back-of-the enveloping! It works out much better if we don't claim her... Thanks for piping up & checking, @8filltheheart! Quote Link to comment Share on other sites More sharing options...
8filltheheart Posted February 12, 2021 Share Posted February 12, 2021 11 minutes ago, RootAnn said: Arg! That is the opposite of what TurboTax & another parent said. Guess I'll be going through the determining dependency support worksheet instead of back-of-the enveloping! It works out much better if we don't claim her... Thanks for piping up & checking, @8filltheheart! Absolutely better if we dont have to claim them, but legally there is usually no way for them to claim themselves. We paid so much in taxes on his scholarships which would have been tax free if he could have been independent. 1 Quote Link to comment Share on other sites More sharing options...
historically accurate Posted February 12, 2021 Share Posted February 12, 2021 Thanks for the heads up. I'll make sure to pull last year's info before I start. DD's 1098T is wrong for 2020, so we have to wait since we used 529 funds to pay for second semester and the school didn't put it on the form and then checked it included it. Argh! 1 Quote Link to comment Share on other sites More sharing options...
8filltheheart Posted February 13, 2021 Share Posted February 13, 2021 @RootAnn I had a minute and I followed the IRS pub 501 referenced in the link above and the 501 statement clarifies it more fully: https://www.irs.gov/pub/irs-pdf/p501.pdf (fwiw, I just control F search the words scholarship or support when I am trying to find the exact info I need. I spent hrs doing this back when ds was in college bc he earned so much in scholarship $$ that we ended up having to make quarterly payments toward his taxes. Quote Scholarships. A scholarship received by a child who is a student isn't taken into account in determining whether the child provided more than half of his or her own support. 1 Quote Link to comment Share on other sites More sharing options...
CamperMom Posted February 13, 2021 Share Posted February 13, 2021 Can someone please explain why scholarships are taxable? Are they all taxable? 2 Quote Link to comment Share on other sites More sharing options...
8filltheheart Posted February 13, 2021 Share Posted February 13, 2021 (edited) 6 minutes ago, CamperMom said: Can someone please explain why scholarships are taxable? Are they all taxable? Scholarships covering qualified educational expenses are not taxable. QEE are tuition, fees, books. Room and board are not qualifed expenses and are taxable. Grants/fellowships for things like Research Experiencese for Undergrads are also taxable as scholarships. Scholarships are not taxed equally as earned income. (Though the tax rate has changed since our ds graduated. I'm not sure what the current tax rate is bc our dd's scholarship does not exceed the standard deduction.) Edited February 13, 2021 by 8filltheheart Quote Link to comment Share on other sites More sharing options...
MerryAtHope Posted February 13, 2021 Share Posted February 13, 2021 5 hours ago, RootAnn said: Arg! That is the opposite of what TurboTax That’s disturbing! A person relies on these companies to help you correctly navigate various circumstances and their tax implications. I do try to look things up and understand, but...wow. 1 Quote Link to comment Share on other sites More sharing options...
Lanny Posted February 15, 2021 Author Share Posted February 15, 2021 Special thanks to TurboTax (Intuit) and the I.R.S. Free File. I was able to eFile the Federal and State returns for DD on the 13th of February. At this time the ETA for her Refund is 06 March. This morning (15 February) I eFiled my Federal return. The ETA for my Refund at this time is 10 March. I sometimes click, because I am curious and want to learn, on the "Help" for a topic in TurboTax and this year, for the Form 1098-T a number of times when I did that, it was blank. I suspect they are redoing that information at this time. My Federal return for 2020 was "Accepted" by the I.R.S. in 23 minutes this morning. 2 Quote Link to comment Share on other sites More sharing options...
Lanny Posted February 20, 2021 Author Share Posted February 20, 2021 OP here and this is an Update on the Refund DD will receive from the I.R.S. I had made a mistake entering the information from the Form 1098-T but fortunately that did not delay her Refund. Somehow I did something that lowered her AGI by one dollar. Using the I.R.S. Free File I used TurboTax to eFile her Form 1040 and other Forms one week ago today, early in the morning of February 13, 2021. Approximately 3 hours later, I was notified that the I.R.S. had "Accepted" her return. Early this morning, February 20, 2021, less than seven 24 hour days after the I.R.S. Acceptance of her Federal return for the 2020 tax year, when I went to the IRS.GOV web page for "Where's my Refund?" (if that isn't the title it is close to that, and to my pleasant surprise, if not total astonishment, the status of her refund had changed from "Return Accepted" or something like that to "Refund Approved". The Direct Deposit is scheduled to be initiated on February 24, 2021 and it says to call the bank if it isn't in her bank account by March 1st. I efiled my return on the 15th and it was accepted by the I.R.S. 23 minutes later. I will monitor the "Where's my Refund" web page each morning until both of us have our refunds. WELL DONE I.R.S. ! Quote Link to comment Share on other sites More sharing options...
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