Yes and no. There is no IRS requirement that you must claim an education credit or tuition and fees deduction. Claiming education tax benefits is a voluntary choice for those who qualify. If you don't want to claim them, you don't file the form.
BUT - you must file the form if you would like claim any of the education tax benefits (unless the school is specifically not required to send you 1098-T).
You must also claim the form if your scholarships/grants/tuition free assistance is larger than your education expenses. The excess is your taxable income and must be reported as such with the form 1098-T.
Hello,
I received Finicibak Aid /Student loan. I received a 1098T form thur my university. I have received in the past but I never file with my taxes., This year I was told I should submit it. Im not sure what do to at this point Im still going to school and I have repaid anything back yet towards my loans
Did you pay any qualified expenses like tuition and the fees (after the financial aid) out of the pocket in 2019?
If you did, you may qualify for an education credit or deduction. To claim, you would have to file your Form 1098-T from school and one of the tax forms, Form 8869 or Form 8917. However, if you did not pay anything out of pocket, you do not have to file any tax forms. To file in TurboTax online, here are the steps:
Sign in to your account, select Pick up where you left off
At the right upper corner, in the search box, type in "1098t" and Enter
Select Jump to 1098t
Per IRS, if you pay your tuition and fees with any student loan amount, you are considered as paying out of pocket as you are required to pay it back in the future. Therefore, you may qualify for one of the tax benefits if meet the requirements. Click here for Education credits and Tuition and Fees deduction.
Please also note that if you have paid any student loan interest, you may also eligible for a deduction. For the requirements and how to claim, click below links:
What is student loan interest deduction
Where to claim student loan interest deduction?
I did not pay anything out of pocket however, box 5 on the 1098 t statement is more than box 1,do I still need to file or no?
If box 5 is larger than box 1, that would indicate that you received more in scholarships that what was spent on tuition.
Unless you spent the excess on books and supplies, the excess would be taxable interest that you would need to file a return and claim.
Do you have any reference to the IRS that backs up that if you receive more financial aid than what you paid in tuition then you are exempt from receiving the 1098T? I am having trouble locating this information. I have heard about this but I have nothing to back it up. Thank you.
If you received more help than you paid (if box 5 is bigger than box 1) then you have taxable income.
Please see this IRS article Publication 5197, Education Credits and Form 1098-T
For Tuition Paid, About Form 1098-T, Tuition Statement
When you start paying back loans, you take the loan repayment credit. Completely different things. Student loan repayment will come on 1098- E.
@mariaa0417
If box 5 is greater than box 1, am I required to enter my 1098T financial aid if I didn't pay for tuition/fees myself? If I don't enter it, it means I will not get educational credit, correct? I did not have excess educational fees.
You are required to pay taxes on scholarship income. You have three options:
My 1098T is included with my income, which makes it look like I made almost 100k in 2020, which I didn't because of the pandemic. This is all financial aid that I did not pay myself from out of pocket. Do I put down what I actually paid myself and adjust the amount? Or do I keep it as what the financial aid I received the same?
If you received scholarship funds (reported in Box 5 on the 1098T) and they were not used to pay tuition, fees, books or supplies, the funds wil be reported as income on your return and you'll be liable for tax on that amount.
If you did not get the scholarship, or the school is holding on to it for future use, you would adjust the amount. It is not clear if you did or did not get the scholarships.
I'm sorry if I'm not being clear, but okay I see what you are saying. I'm still a bit confused though on why it's being reported as my income because the amount in Box 5 was used towards my tuition, fees, books, and supplies.
The amount in Box 5 is much larger than Box 1 though. And from what I've read I'm supposed to report this. Why is it being counted as my income if all of what I've received from financial aid went straight to my education expenses? (if I'm not being clear enough is there some way to contact someone further from this chat?)
Thank you!
Yes, you're not being clear.
It's usually very simple: if box 5, of a 1098-T, is more than box 1, the difference between the two is all taxable income to you. The only adjustment would be for books and other required course materials, not included in box 1. There is a place, after entering the 1098-T to enter those expenses. Room and board and other living expenses are not qualified expenses for reducing the amount that is taxable.
Q. Why is it being counted as my income if all of what I've received from financial aid went straight to my education expenses?
A. If it went "straight to education expenses", why weren't those expenses included in box 1? Underneath box 1, In the 1098-T screen, click on the link "What if this is not what I paid the school" under box 1. You will then be able to enter your actual amounts (not including room & board and other living expenses). This is the amount that TT will used to calculate the taxable part of your scholarship.
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