1098-T : Timeline for Box 1 and Box 5 don't match

[poco_ny123]

In my 1098-T form, expenses in Box 1 is showing about $10,000 less than grants/scholarship received in Box 5. The expense in Box 1 is reported based on the calendar year (i.e. Jan-Dec), while grants/scholarship in Box 5 is reported based on semesters (i.e. Fall 2021-Spring 2022); basically, there is a timeline difference between Box 1 and Box 5. For reporting 2022 1098-T, this becomes an issue because I was only enrolled in less credit (1 credit) for the graduation year of Fall 2022 (which means less expense on tuition), while Box 5 shows that I was granted with full scholarship from Fall-2021 to Spring 2022. Since I was only enrolled in 1 credit for Fall 2022, Box 1 (expense from Spring 2022+Fall2022) is significantly less than grants received in Box 5 (grants from Fall 2021+Spring2022). My school said the grant for Fall 2022 will show up on the 2023 1098-T form. Fall 2022 was my last semester and Box 1 would be zero in this case (there isn't any rollover amount or tuition for 2023). I don't think this makes sense because the grants were used to pay the tuition expense but the time difference is making me pay ~$1.5k. There would not be an issue if I enrolled in full credit for Fall 2022 because Box 1 and Box 5 would match despite the timeline difference from the same amount charged and paid.  The fact that I was only registered for 1 credit in Fall 2022 and the timeline difference between Box 1 and Box 5 seems to cause this issue (what was spent vs paid doesn't match).

If I generated the "expected" 1098-T for the year 2023 with $0 on Box 1 and $1000 on Box 5 (grant for 1 credit), I am not getting much refund on the excess of $1.5k that I would pay this year. Any help would be greatly appreciated! Thank you so much

[Hal_Al]

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 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.

[poco_ny123]

Hello, thank you for the response. Which box would be appropriate to make the changes? I did pay the correct amount on Box 1 but is not matching with the timeline of Box 5.

[AmyC]

Change box 1. Scholarship income must be reported in the year received. Tuition paid includes the calendar year of the 1098-T plus 3 months of the next year.

See page 12, What Expenses Qualify at IRS Publication 970, Tax Benefits for Education.

[Hal_Al]

Q. Which box would be appropriate to make the changes? 

A. You have to make that decision based on your own records.   Note that this is a common enough problem that TurboTax anticipates it with the screen to adjust the scholarship amount for "amounts not awarded for 2022 expenses".