Are "mandatory fees" considered educational expenses? If so, where are they entered?

[Scap1]

My son is a graduate student.  He receives grants and/or scholarships to cover both tuition and "mandatory fees."  His university pays itself; he does not receive any funds nor does he have to pay anything.  His 1098-T shows only the tuition amount in Box 1.  In Box 5, it shows the total of both tuition and the "mandatory fees."  Is the amount the university pays itself for "mandatory fees" taxable income to my son or is it an educational expense?  If it can be used to offset the grants and/or scholarship amounts in Box 5, where does it get entered in TurboTax?  The only place I could find where I could enter it is the line for "Books and materials required to be purchased from the school," but this does not say anything about fees required by the school in order to attend classes.

[Vanessa A]

Mandatory fees are part of education expenses and would be covered by grants and scholarships.  Yes, they would offset taxable income from the scholarships and grants.

The mandatory fees are likely included in Box 1 of his 1098-T.  These would include student fees, attendance fees, enrollment fees).  If the school charged them as part of his educational costs, then they should be included in box 1.

[Scap1]

Thank you Vanessa.

I was able to find a breakdown of the "mandatory fees."  On the university's website, they indicate that the "Student Activity, Technology, and Repair and Rehabilitation" parts of the fee are "Qualified Education Expenses."  However, I can tell that they have not included them in Box 1.  Should I add the amount for these components on the line for books that have to be purchased from the university?

(The "student health and Transportation" components are listed as not qualified, which makes sense to me.)

[Hal_Al · Accepted solution]

Q. Are mandatory fees considered qualified educational expenses (QEE)?

A. It's a complicated subject, but the simple answer is: No, unless the amount is included in box 1 of the 1098-T.  In your situation, that does not appear to be the case. So, no. 

Per Pub 970, "Fees required to enroll at or attend an eligible educational institution" are Qualified education expenses.  But then it says:

"Some eligible educational institutions combine all of their fees for an academic
period into one amount. If you don't receive or don't have
access to an allocation showing how much you paid for
qualified education expenses and how much you paid for
personal expenses, such as those listed earlier, contact
the institution. The institution is generally required to make
this allocation and provide you with the amount you paid
for qualified education expenses on Form 1098-T."

"Student activity fees are included in qualified education expenses only if the fees must be paid to the institution as a condition of enrollment or attendance".

"Qualified education expenses don't include amounts paid for:  Medical expenses (including student health fees)"

Q.  If "mandatory fees" are  considered educational expenses, where are they entered?

A. Usually they're already included in box 1 of the 1098-T, so a separate entry is not required. Otherwise, you'll have to use a workaround. There are a couple of choices:

1. enter as books and materials required to be purchased from the school

2. Add it to the box 1 amount at the W-2 screen. 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.