What does this mean: "Tell us if any of the $ in Box 5 of 's 1098-T includes amounts already reported as income on 's tax return"?

[mister-broshar]

How would I know if any of the amount is included as income? How could that happen? Since it asks, I assume it's possible, but I don't understand how it could happen or how I would know. I guess this refers to my kid's W2/1099MISC which is weird since it's not mine. And if look my kid's docs how would I know if the $ was part of what's on their forms? I'm tempted to answer no, but that's more a guess. It's like many TT questions: surely there's a reason to ask but I don't know why; I don't understand the context. Asking a question always begs the question: why are you asking? or how would I know? TT does not do good enough job anticipating or responding to such natural questions.

[ThomasM125]

It means you need to find out if your son is reporting any of the scholarship income on his tax return, which could happen if he received a Form 1099-Misc or W-2 form reporting scholarship income. You can look at the source of the income reported on the tax forms to see if it is associated with scholarships.

Box 5 of the Form 1098-T reports scholarship income. That is used to reduce the education expenses reported in box 1 to determine the net education expense used to determine what your education credit is. Your son could report that as income if he received a tax form crediting him with scholarship income and then you would not have to reduce your education expenses by that amount. That could increase your education credit, so TurboTax needs to know about it.

You will need to ask your son if he is reporting any scholarship income on his tax return.

[mister-broshar]

Well intentioned, but I'm still scratching my head.

Is the reporting of scholarship as income an option or required based on info on their 1099-Misc/W-2? Can my kid choose what to report as income? Is this something we can plan together to minimize overall tax liability? Or is it simpler: I just need to see my kid's 1099-Misc/W-2 report?

[KrisD15 · Accepted solution]

The question is asking about Box 5 on a 1098-T.

Box 5 on a 1098-T is reported by the school. It is the amount the school received as financial aid given on behalf of the student to be applied to the student's education expenses. 

Education credits and possible taxable income (for the student) are calculated on numbers entered from Form 1098-T, but some of the numbers can misleading. Credits and taxes are computed on the calendar year. School years often cross calendar years. Schools often bill in December of one year and a scholarship (to cover those costs) might not post until January the next year. 

Form 1098-T does not tell the TurboTax program everything it needs to know to make the proper calculation. 

MOST scholarships go directly to the school and are in Box 5 on Form 1098-T.

Some scholarships are given to the student directly and not listed in Box 5.

Still others might go to the school, be in Box 5, AND ALSO listed as income on some other tax form, such as a W-2 or 1099.

The question you're asking about has to do with this last situation

"Still others might go to the school, be in Box 5 AND ALSO listed as income on some other tax form." 

Did the student get "Employer Education Assistance or Reimbursement" which which was included on the student's W-2, or a scholarship that an organization issue a 1099-MISC for that amount to the student?

The program does not want you (or the student) to report any scholarship twice. 

This is asking about scholarships, not gifts, and only if the same amount was double-entered (so also on an additional tax form).