Received 1098-T. Box 5 greater than Box 1. Do I qualify for Credit or Is this reported as Income?

[Lala713]

I am 21 years old. My parent does not file taxes. I work, so I file my own taxes and claim my 12 year old brother as a Dependent. I made$40k during 2025 and got a W2. w2 info: Box 1 - $42952, Box 2 - $3571, Box 4 - $2663, Box 6 - $622.80.

I am also going to college and received a 1098-T. Box 1 shows $2787 and Box 5 shows $10615.

I read that I would have to report as Income.

If I ignore the 1098-T, my refund is $4984.

I tried preparing my taxes on HRBlock online software and entered the 1098-T, but it did not show that I would have to pay anything for the overage in Scholarship amount vs Tuition.  It still shows a refund amount of $4984.

Is this correct? Should I leave as is?

[KrisD15]

There is not enough information to address your refund, but you can look at your Schedule 1 line 8r to see if the extra scholarship was reported. 

[Lala713]

Even though I entered the 1098-T amounts of Box 1 and Box 5. HRBlock did not enter it onto Sch 1. That's why I want to know if it is necessary to report?

[AmyC]

The IRS will see the scholarship income and expect all of it to be taxable. You do want to enter the 1098-T and see if you can reduce it with any eligible expenses.

Your income is low enough to support you claiming some of the scholarship as living expenses, unless your scholarship specifically prohibited use of the funds for personal use. That isn't common.

If your scholarship allows you to use the funds however you want and you are at least half-time, no felony, first 4 years of college:

1. enter the 1098-T with $4,000 in box 1 to get the full education credit stating that you paid it. Yes, the IRS allows this.
2. Now, take the original box 1 of $2787 and add it to the scholarship box 5 income and enter your new box 5 total. 
3. At this point, you think I went crazy. Incredibly enough, the huge education credit very much outweighs the extra little tax on the income. You could see up to $2,500 more in your tax refund.