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mpirkl67
Returning Member

1098T 2019

My son received a scholarship in box 5 that was used for tuition paid in 2018. He graduated in May of 2019. His box 5 amt is $5000 and box 1 amt is blank. How do I report this? Is this taxable income on his return?

3 Replies
LinaJ2020
Expert Alumni

1098T 2019

How was the 2018 Form 1098-T reported?  Did he receive any part of the scholarship to pay for his 2018 tuition? 

 

@mpirkl67

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mpirkl67
Returning Member

1098T 2019

In GA, his scholarship from the state covers 100% of tuition only. His 2018 1098T shows 11918 in box  1 and 10008 in box 5., but we've always paid his tuition in Dec. for the spring semester. It looks to me like the actual scholarship amt is awarded in Jan. of spring semester.

KrisD15
Employee Tax Expert

1098T 2019

Education credits are based on the expenses paid in the tax year (Box 1). 

The 1098-T does not always tell the whole story. 

If a scholarship pays in the following calendar year, you need to subtract that amount from the expenses you claim (as well as subtracting the amount of box 5 from box 1 if applicable) OR allocate it to expenses for the following year (the year it is received).

 

ACCORDING TO THE IRS:

“Refunds. A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year.”

“Refunds received in 2019. For each student, figure the adjusted qualified education expenses for 2019 by adding all the qualified education expenses for 2019 and subtracting any refunds of those expenses received from the eligible educational institution during 2019.

Refunds received after 2019 but before your income tax return is filed. If anyone receives a refund after 2019 of qualified education expenses paid on behalf of a student in 2019 and the refund is paid before you file an income tax return for 2019, the amount of qualified education expenses for 2019 is reduced by the amount of the refund.

Refunds received after 2019 and after your income tax return is filed. If anyone receives a refund after 2019 of qualified education expenses paid on behalf of a student in 2019 and the refund is paid after you file an income tax return for 2019, you may need to repay some or all of the credit. See Credit recapture next.”

“Credit recapture. If any tax-free educational assistance for the qualified education expenses paid in 2019 or any refund of your qualified education expenses paid in 2019 is received after you file your 2019 income tax return, you must recapture (repay) any excess credit. You do this by refiguring the amount of your adjusted qualified education expenses for 2019 by reducing the expenses by the amount of the refund or tax-free educational assistance. You then refigure your education credit(s) for 2019 and figure the amount by which your 2019 tax liability would have increased if you had claimed the refigured credit(s). Include that amount as an additional tax for the year the refund or tax-free assistance was received.”

 

TurboTax can help you do this:

Type   recapture education deduction   into the search box located at the top right of the screen

Click on the “Jump to recapture education deduction” link

 

There are other factors involved when claiming education expenses, scholarships, and credits. 

 

IRS Pub 970

 

 

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