Do I have to claim scholarships/grants from my 1098-T on my 2017 taxes if my institution bills in December of 2016?

[aworden7]

Box 2 on my 1098-T has no value in it, but I do have a value on scholarships/grants. When walking through TurboTax software, it seemed to have made me claim my scholarships/grants as income. I checked with my school and they said that the money I received did go to educational expenses.

The past 3 years my accountant used the American Opportunity credit for me. So I have 1 year of eligibility of the credit left. However, I can't seem to be qualified for it via the questions the software asks me. I think I am accidentally claiming my grant money as income, even though it really isn't. If I do not qualify, that is ok. But everything I have read on IRS and these forums points me to that I do not need to pay taxes on my scholarships/grants for Spring 2017. Do I not report these then for my 2017 filing?

[KrisD]

No, if the scholarship which posted in 2017 covered tuition for classes that were billed in 2016, then you do not need to claim that amount as income. 

You'll need to look at your student account records as well as the 2016 1098-T. If the school billed in 2016 for classes that started in 2017, and the scholarship paid for those classes in 2017, you do not need to claim the scholarship as income. Keep copies of the student account and the 1098-T with your tax file. Also make sure the expense billed in 2016 (that you are applying against the scholarship) was not used for a credit in 2016. 

CLICK HERE for IRS Pub 970 Education Credits

[aworden7]

Thanks for the answer. So essentially when I am asked about the 1098-T for 2017, I put $0 in for my values because I am not claiming the scholarships?

[KrisD]

You can enter the 1098-T with zero in box 2 and the scholarship amount in Box 5, but then click the link under box 5 that says "What if this is not what I paid?" and enter the amount of the scholarship that posted to the school in 2017. This will result in no income. Keep a copy of your school account record with your tax file.

[aworden7]

awesome, thanks. I saw that clickable link in another post about 5 mins before your response. After inputting tuition amount everything fell into place and started looking like my previous filings. Thank you.

[KrisD]

Thank you for using TurboTax.