What tax issues should I prepare for?

WantWhatsBest
Fri, 30 Mar 2018 22:53:44 +0000

This is our first year with a child in college for the fall 2018 semester. We have a tuition waiver benefit from my DH being a staff member at the school my DS will attend. DS also got a small amount of scholarship that they will apply to room and board. We will still have about $10k in R&B per year, and we plan to pay for the those costs as well as any books/supplies from our 529 funds. As I understand it, R&B is an allowable QHEE that you can use 529 funds on. I will have those funds disbursed either to the school directly or to my DS (the beneficiary) directly. We will keep good records.

In addition, DS will have a job this summer. I don’t know how much he will make from it. Probably around $4000.

We will not qualify for any education credits based on our MAGI.

I believe we will still be able to claim DS as a dependent. He will not be living at home. He will be living on campus in another state.

Do we still claim him as a dependent? Do the 529 funds we use for R&B count as supporting him for more than 50% of the time?

Also: I assume he still files his own tax return and includes his summer income as well as the R&B scholarship on that return? Or do the parents claim the R&B scholarship?

Are there any other tax forms or issues to be aware of based on the facts above? I am assuming I will still get a 1098-T even though we have a tuition waiver – and I have heard that the amount on that form doesn’t always match what you paid out.

I also assume the 1099-Q from the 529 will be given to my DS and he would report that on his return since the funds were disbursed to him. Is that correct?

First time with all of this, so I have a lot of questions. Thanks for any insights. Really appreciate it.