Mom and Son and Trust Fund

Apr 03, 2012 1 Replies

In 2011, son was a full time college student at Tulane. Has a 1098-T for $42,000 in paid tuition, including a $24,000 scholarship.



Father is deceased, but left a trust fund that pays the son about $9,000 a year and pays the college tuition. When home, son lives partly with mom and partly with step-mom in the same town. Mom's address is son's legal address.



Mom takes son as dependent and files as Head of Household and is claiming tuition tax credits for son's tuition. Son files his own tax return, does not claim dependency, has W-2 income and dividend and interest income from the trust, taxed at his mother's tax rate.



I'm not familiar with step-mom's situation or tax return.



This is confusing set of circumstances. Does this appear correct? Mom gets dependency and HoH and tuition credit and son files with his earned and investment income?


The Trust should be issuing a K-1 for distributions. If any of the $9000 is earnings and not principal, it's taxable to the son. Same for the amount that pays for college. Any earnings within the trust need to be accounted for. It sounds like the trust is handled by a third party, is the Mother seeing the K-1 or just getting checks?

Not sure that anyone can take the tuition credit without actually paying the tuition, unless the money passes through them first.

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