2022 1098-T showing scholarships received that were already included in 2021 tax filing.

[J_34]

My child’s last semester of college was the spring of 2022.  When we filed our 2021 return, we included tuition payments and scholarships received for that last semester of 2022. The 2021 1098-T totals were not correct and we manually added/reported the scholarship amounts for the last semester.  We filed with him as a dependent, and a portion of the scholarships were taxable income and paid for on his return. Now, this year we will not be claiming him as a dependent, and he has received a 1098-T for 2022 that lists only scholarships in box 6 and no qualified tuition expenses. These are the scholarships that we manually added to our 2021 returns. 

Looking closer at the college billing records, they posted the tuition bills in early December 2021, and didn’t post the scholarships until the first week in January 2022. There is no official “payment date” because the scholarship and tuition offset itself. The result was the tuition for 2022 was listed under 2021 and their system put the scholarships under 2022.

My questions/concerns-

Now we have a 2022 1098-T showing Scholarship money received and with an empty box 1, the scholarship looks like 100% taxable income. But those were already included as additional scholarships on the 2021 return.  I have done a lot of reviewing on this subject and see where the 1098-T is for our informational use only. But If the 1098-T is submitted to the IRS, then wouldn't that would be a red flag if no scholarship income is reported by us for 2022?

Do we have choices in handling this?

If the 1098-T is “informational”, he  just doesn’t include it this year because I know it was already included in last year's return?

Does he include it as income and pay tax on it again?

Do we file an amended return for last year removing the scholarships we added, which could also affect our (parents) return since he was a dependent along with American opportunity credits. 

I have a feeling I will get mixed responses but I am looking for some direction.

Thanks in advance!

[Hal_Al]

Q. If the 1098-T is “informational”, he  just doesn’t include it this year because I know it was already included in last year's return?

A. Yes.

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. 

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".

[KrisD15]

You may report the 1098-T as directed above or 

You may simply not report this new 1098-T. 

Adjusting in the program (in your case) will zero out the 1098-T. 

Worksheets are not transmitted, so it will be the same as if you never enter the 1098-T to begin with. 

Keep the student's school account records with your and the student's tax files. 

According to the IRS:

"Some tax-free educational assistance received after 2021 may be treated as a refund."

"Refunds received after 2021 but before your income tax return is filed. If anyone receives a refund after 2021 of qualified education expenses paid on behalf of a student in 2021 and the refund is paid before you file an income tax return for 2021, the amount of qualified education expenses for 2021 is reduced by the amount of the refund."

“For 2021, treat an academic period beginning in the first 3 months of 2022 as if it began in 2021 if qualified education expenses for the student were paid in 2021 for that academic period.”

(adjusted for the Tax Year in question) 

@J_34