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11madmic
New Member

1098-T stated as income

I am a full time, independent student who receives financial aid to pay for school. I have no other source of income and educational expenses that exceed the scholarships or grants on the 1098-T. After I finished my federal refund ($0) it began my Michigan state taxes and generated that i have an income of the amount from box 5 (scholorships and grants) from my 1098-T. But this is not income, it paid for my school and expenses related to school, and wants me to pay a large state tax even. I feel there is something wrong, as last year i was in the same situation and it was zero.
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1 Reply
ChrisJ
New Member

1098-T stated as income

A scholarship or fellowship grant is tax-free only to the extent it doesn't exceed your qualified education expenses.

If and to the extent your scholarship or fellowship grant doesn't meet the requirements described earlier, it is taxable and must be included in gross income. 

https://www.irs.gov/pub/irs-pdf/p970.pdf page 5

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