1098-T Incorrect Tax Form Box 5

[ohionstudent5]

I just received my 2022 1098-T form. My box 1 is reported as $7,701.00, which is fairly accurate. There were other fees such as graduation application fees and small course purchases that I'll have to manually add in. However, the big issue I'm having is with my Box 5. It's reported as $20,051.22, which is nowhere close to any grants or scholarships I received. After adding up all of the direct deposits I had, it only comes to around $10,400. What do I do? There's no place for me to indicate that Box 5 is incorrect, unlike Box 1. I also went to this school last year with the same grant/scholarship and never received a 1098-T, so I never filed it with my taxes in 2021 since one never came in the mail. My university's website also said the 1098-T is only informational and does not need to be filed. 

[CatinaT1]

You are only able to claim an education credit if you had tuition and other expenses that exceed your scholarship amounts. (In other words, generally Box 1 is larger than box 5).

I would contact your school to discuss the tuition and scholarship amounts. It could be the difference in what calendar year the scholarships were applied to.

[ohionstudent5]

Hello! I'm not really trying to claim any credits, since I'm fairly sure I don't qualify. But when I enter the information as is, it's saying I owe around $900 in taxes? I called my university last night, but they said the 1098-T information is final and they don't change it, but verified the information was correct and was put towards tuition and fees in some way. I asked them why I didn't get a 1098-T last year even though I had the same grant and they weren't sure. But their site also says it's informational only and there's no requirement to report it. It's just confusing to me. 

[CatinaT1]

This is because you are being taxed on your scholarships that don't have education expenses entered. Your 1098-T is showing more scholarships/grants than education expenses.

To me, it sounds like your scholarships for 2021 and 2022 were combined into this one 1098-T, and that may be due to how the school breaks up its semesters.

You do not need to enter your 1098-T at all in your return if you did not receive money from scholarships that were not applied toward education expenses and you are not claiming an Education Credit.

[Hal_Al]

I agree with CatinaT1, you do not need to enter your 1098-T, at all, if you know none of it is taxable and that you are not eligible for a credit. 

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. 

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 2022 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.

[Hal_Al]

There is a tax “loop hole” available. The student reports all his scholarship, up to the amount needed to claim the American Opportunity Credit (AOC), as income on his return. That way, the parents  (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.

Using an example: Student has $10,400 in box 5 of the 1098-T and $7700 in box 1. At first glance he/she has $2700 of taxable income and nobody can claim the American opportunity credit. But if she reports $6700 as income on her return, the parents can claim $4000 of qualified expenses on their return.

Books and computers are also qualifying expenses for the AOC. So, extending the example, the student had another $1000 in expenses for those course materials, paid out of pocket, she would only need to report $5700 of taxable scholarship income, instead of $6700.

If you or your parents have already claimed the AOC four times, then you can't do it again.  You could claim the Lifetime Learning Credit (LLC) instead, but the math doesn't work as well.  The LLC is 20% of tuition paid (books & computers don't count) and you have to claim all $10,400 as income.  Assuming a 12% tax bracket, only about $600 of savings vs. about $2100 with the AOC.