1098-T Box 1 - before or after grant?

[vadimrapp]

I need some help understanding the calculation of the education expenses in TT.
The cost of the tuition billed by my son's college in 2023 was $67K; plus ~$11K room and board. He received a grant $29K and we paid the rest.
Form 1098-T sent by the college has only $47K in box 1, which appears as this is (tuition + R&B - grant) .
But from what I see in Student Information Worksheet, TT assumes that the amount in box 1 is the cost of tuition, so it deducts the grant from this amount (line 15: tax-free assistance). So it appears as the grant is deducted twice?  

According to form's instructions, Box 1 "shows the total payments from any source less reimbursements and refunds" - but not grants. So I wonder if the college is correct by reducing Box 1 by the grant amount.

[Hal_Al · Accepted solution]

Q. 1098-T Box 1 - before or after grant?

A. Before.

Q. Form 1098-T sent by the college has only $47K in box 1, which appears as this is (tuition + R&B - grant) ?

A. No. Box 1 is tuition and fees only, before grants. No room & board in box 1. 

Q.  So I wonder if the college is correct by reducing Box 1 by the grant amount.

A. It would not be correct to reduce box  1 by the grant.  But, it's unlikely the school did that. More likely, you're not understanding it.  One possibility is that the $67 included spring 2024 term.  That said, it would not be the first time, in this forum, we've seen a school do it wrong.

$47K - 29K = $18K.  There's plenty of expenses for you to claim the tuition credit and the scholarship to remain tax free. 

The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or possibly your student has taxable scholarship income. 

If you claim the tuition credit, you do need to report that you got one or that you qualify for an exception (the TurboTax interview will handle this)

You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. In the 1098-T screen, click on the link "What if this is not what I paid the school" underneath box 1. You will then be able to enter the actual amounts paid. You will also reach a screen that allows you to adjust the scholarship amount for "amounts not awarded for 2023 expenses".

Or if you find it easier, just change the numbers in boxes 1& 5 to what your records show. The 1098-T that you enter in TT is not sent to the IRS.

[vadimrapp]

> One possibility is that the $67 included spring 2024 term

Yes, what we paid in 2023 did include it, and I marked the checkbox in TT reflecting it, which does not seem to have any effect.

Can you tell, how is "cost of the tuition in 2023" defined - is it the amount paid to the school in 2023 for the tuition (which includes 2024 term), or the amounts the school billed for the spring and fall semester of 2023 (of which part was paid in 2022)? 

>$47K - 29K = $18K.  There's plenty of expenses for you to claim the tuition credit and the scholarship to remain tax free. 
We paid  about $38K from 529 fund, so this resulted in excess distribution.

[Hal_Al]

I don't know where you are seeing the term "cost of the tuition in 2023".  Box 1 of the 1098-T is Payments received (by the school) for qualified tuition and related expenses.

Q. What is the tuition credit based on;  is it the amount paid to the school in 2023 for the tuition (which includes the2024 term), or the amounts the school billed for the spring and fall semester of 2023 (of which part was paid in 2022)? 

A. It is not the amount billed.  It is the amount paid in 2023.  Any amount paid in 2022 (for 2023) cannot be claimed on the 2023 tax return. It should have bee claimed on the 2022 tax return. Even then, it can only be claimed if it was for a term starting in Jan-Mar 2023.