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catplotlib
New Member

Difference between 1098T Box 5 and Box 1 was for tuition

Box 5 on my 1098T is greater than Box 1, but this difference was not pocketed as spending money. It was used to pay for tuition that wasn't accounted for in Box 1 due to the difference in calendar and academic years. TurboTax, however, thinks I simply took this money home and telling me I need to pay taxes on the rather large difference between Box 5 and Box 1. Where can I indicate that part of Box 5 was used for tuition for a different year? Thanks!

4 Replies
Hal_Al
Level 15

Difference between 1098T Box 5 and Box 1 was for tuition

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".

 

Or if you find it easier, just change the numbers in boxes 1& 5 to what your records show. The 1098-T that you enter in TT is not sent to the IRS.

 

*If you claim the tuition credit, you do need to report that you got a 1098-T or that you qualify for an exception (the TurboTax interview will handle this)

Hal_Al
Level 15

Difference between 1098T Box 5 and Box 1 was for tuition

There is a tax “loop hole” available. The student reports all his scholarship, up to the amount needed to claim the American Opportunity Credit (AOC), 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.

Books and computers are also qualifying expenses for the AOC. So, extending the example, the student had another $1000 in expenses for those course materials, paid out of pocket, she would only need to report $5000 of taxable scholarship income, instead of $6000.

catplotlib
New Member

Difference between 1098T Box 5 and Box 1 was for tuition

Hi @Hal_Al , I appreciate the reply. I'm not finding a screen that allows me to adjust the scholarship amount for "amounts not awarded for 2020 expenses". This would certainly solve my problems though. Could you point me towards where I can find this? Thank you!

Hal_Al
Level 15

Difference between 1098T Box 5 and Box 1 was for tuition

Go through the entire education interview until you reach a screen titled "Your Education Expenses Summary".  Click edit next to the student's name. That should take you to a screen “Here’s your Education Summary”. Click edit next to the section you want to change; scholarships, in your case.  

 

It should be the 2nd screen in. 

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