1098-T scholarships/grants exceed tuition

[cmsivek]

Hello, I was recently filing my taxes on TurboTax and need some clarification. I was moving along just fine and my expected refund was ~$600 for my federal return and ~$250 for my state return. My income from my taxable job in 2019 was  $9034, pretty much the same as in 2018, so I was expecting to get around the same refund. I got to the point where I entered the numbers from my 1098-T that my school sent me. I did research and understand that when my scholarships/grants exceed my tuition, then I must report the 1098-T on my taxes and not my parents. My scholarships/grants exceeded my tuition by $2,637, and after I entered my 1098-T my federal refund shot from $600 refund to $3300 owed, and my state refund (VA) went from $250 return to $800 owed. For my federal and state taxes combined, that is a net change of about $5000 in the "owed" direction. How is this possible for only $2,637 excess scholarships/grants? Box 4 on the 1098-T was $1,252 if that makes any difference. I am single, a full-time student, and can be claimed as dependent by my parents. Thank you for any answers.

[DawnC · Accepted solution]

I would suggest reviewing your W-2 entries and the 1098-T, carefully.  Or when you say ''taxable job'', do you mean 1099 self-employment instead of W-2 employment?   

Also, please see this discussion about the entries for the student and parents when scholarships exceed expenses.  You have options and should work with your parents so that between your two tax returns, you can maximize any education credits and minimize taxable income.  

Fact Sheet: Interaction of Pell Grants and Tax Credits: Students May Be Foregoing Tax Benefits by Mi...  

[NCperson]

on the 1098-T, leave Box 1 blank and put $2637 in box 5..... (and if TT doesn't accept the zero in Box 1, use $1)

does that fix it? what did you enter for 1098-T before? 

[cmsivek]

Thank you for your response.

I checked my W2 and it is correct. I deleted the 1098-T form from TT and re-entered the form. This time my refund went to $973 owed for federal and $800 owed for state. I deleted and re-entered a third time and this time it didn't change the refund at all; it remained at $600 federal refund and $250 state refund. I've redone it again two more times and it resulted in no change to my refund value. I don't want to say that it's impossible that I made a typo entering the data before, but I find it hard to believe since I am adamant that I entered the same exact values every single time, and I usually always triple check values before I save a particular form. Nevertheless, it seems that the calculated values are back to normal (or at least back in my favor).

[cmsivek]

Thank you for your response @DawnC .

I checked my W2 and it is correct. I deleted the 1098-T form from TT and re-entered the form. This time my refund went to $973 owed for federal and $800 owed for state. I deleted and re-entered a third time and this time it didn't change the refund at all; it remained at $600 federal refund and $250 state refund. I've redone it again two more times and it resulted in no change to my refund value. I don't want to say that it's impossible that I made a typo entering the data before, but I find it hard to believe since I am adamant that I entered the same exact values every single time, and I usually always triple check values before I save a particular form. Nevertheless, it seems that the calculated values are back to normal (or at least back in my favor).