1098T

[Jaknhk12]

My sons 1098T shows higher scholarships than tuition paid because of timing. 
I paid spring 2020 in 2019. I assumed I could pay spring 2021 in 2020. But his college changed the billing to 2021. So only 1 semester of tuition is on the 1098 but 2 semesters of scholarships/grants.  We do not have a 529 plan and I claim him as a dependent.   Is there anything I can do to avoid him having to pay tax on the difference? I also lost the AOT credit. Frustrated! 

[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 deduction or possibly your student has taxable scholarship income. 

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 2020 expenses".

[Jaknhk12]

 thank you for the response. But I didn’t think it was that cut and dried.  It seems as if your comment contradicts the information I received below. 
- Scholarships and grants are claimed/reported as taxable income (initially) in the year they are received. It does not matter what year that scholarship or grant is *for*

- Tuition and other qualified education expenses are reported/claimed in the tax year they are paid. It does not matter what year they pay *for*.

Understand that figuring out who claims the student as a dependent, and determining who claims the education expenses & credits, is two different determinations. It depends on the specific situation as outlined below.

[Jaknhk12]

 thank you for the response. But I didn’t think it was that cut and dried.  It seems as if your comment contradicts the information I received below. 
- Scholarships and grants are claimed/reported as taxable income (initially) in the year they are received. It does not matter what year that scholarship or grant is *for*

- Tuition and other qualified education expenses are reported/claimed in the tax year they are paid. It does not matter what year they pay *for*.

Understand that figuring out who claims the student as a dependent, and determining who claims the education expenses & credits, is two different determinations. It depends on the specific situation as outlined below.

[AmyC]

The IRS says in Publication 970 (2020), Tax Benefits for Education | IRS:

Form 1098-T, Tuition Statement. When figuring an education credit or tuition and fees deduction, use only the amounts you paid and are deemed to have paid during the tax year for qualified education expenses. In most cases, the student should receive Form 1098-T from the eligible educational institution by February 1, 2021 (January 31 falls on a Sunday). However, the amount on Form 1098-T might be different from the amount you actually paid and are deemed to have paid. In addition, Form 1098-T should give you other information for that institution, such as adjustments made for prior years, the amount of scholarships or grants, reimbursements, or refunds, and whether the student was enrolled at least half-time or was a graduate student.

I don't know the scholarship amounts, but if your son's only income was scholarship, the first $12,400 is not taxable. Beyond that, barely taxed. It  may be better for him to claim some income and you might still get a credit. Please look at another of my answers for help.