If you received form 1098-T Tuition and the Box 5 Scholarships are greater than the amount in Box 1 or 2, the difference may be added as income, on your income tax return.
Generally, you pay income taxes on taxable scholarships and grants but not social security or Medicare taxes.
stipends or grant money, if not used for qualified education
expenses is taxed as income and belongs on Form 1040 Line 7 with SCH in front of the line number.
Per IRS Publication 970 Tax Benefits for Education : Payment for services. In most cases, you must include in income the part of any scholarship or fellowship that represents payment for past, present, or future teaching, research, or other services. This applies even if all candidates for a degree must perform the services to receive the degree.
To enter scholarships, grants, stipends NOT INCLUDED on your Form 1098-T:
- Type scholarships in the search box and click search.
- Click on Jump to scholarships.
- Continue with the onscreen interview.
To enter scholarships, grants, stipends INCLUDED on your Form 1098-T:
- Don't enter your 1098-T if your employer reimbursed you for the tuition. Otherwise:
- Open (continue) your return in TurboTax, if it's not already open.
- In the search box, search for 1098-T or 1098T (lower-case works also) and then click the "Jump to" link in the search results.
- Answer Yes to Do you want to enter your higher education expenses?
- If you land on the Let's estimate how much you could get this year, click Skip this.
- If you land on the Your Education Expenses Summary screen, first select Edit next to an existing student or select Add a new one before proceeding.
- Answer any questions that follow. After a few screens, you'll be asked if you received a 1098-T. Answer Yes and click Continue.
- Enter your Form 1098-T exactly as you see it, even if you think it's wrong. Here are some important tips:
- If any boxes on your 1098-T are blank, leave them blank. Don't enter 0 (this may cause errors later).
- If boxes 1 or 2 on your 1098-T form are wrong, enter those amounts anyway. Then click What if this is not what I paid? right below box 2 and enter the correct amount of tuition paid.
- Don't include grants not already listed in Box 5. We'll ask about those later.
- Click Continue when you're done entering the information from your 1098-T. Answer any additional questions on the following screens.
See the screenshot below.
- Why is my scholarship taxable?
- Are my scholarships, fellowships, or grants taxable?
- Where do I enter a scholarship, fellowship, grant, or other financial aid I received?