1098T Not Correct

[josh4256]

Background from previous post:

My child's 1098T shows both Fall 2019 and Spring 2020 qualified education expenses paid.  However, the 1098T only reflects the Fall 2019 scholarship.  When we paid the tuition for the Fall and Spring, the scholarships were applied to the Fall and Spring so we knew how much to pay.  Now, the school moved the Spring 2020 scholarship to 2020.  So now, next year, we will have scholarship $ with no corresponding expenses for the Spring 2020 time.  What do we do?  Thank you!

For which user JotikaT2 answered to not modify a school’s 1098T.  (See a few posts below for the reponse).

But because I marked answer okay…I don’t think my new question that I thought of after would be looked at so here it is again. Sorry for posting twice!

Okay I also feel the 1098T should not be modified.  However, because of how it is shown, Fall 2019 and Spring 2020 qualified education expenses against the Fall Scholarship, our personally paid qualified education expenses for the credit are not being overstated by $600.  Because a portion of her Fall Scholarship was income.  So how do we correct?  Box 1 is $12K Box 5 is $9K of the $9K $4.8K is income.  My child's earned income is $3K.  So not sure what to do?  I will call school and ask why they moved the Spring 2020 scholarship from the Fall 2019 payment to Spring and did not show it on 2019 1098T.  Thank you.

[Hal_Al]

Modify the 1098-T, as needed.

 The 1098-T is only any 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 deduction 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. 

"$4.8K is income.  My child's earned income is $3K".   As long as she is under $12,200 total income, she will not pay any tax.

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Furthermore, there is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, 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 $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.