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taxnoob98
New Member

Do I need to include my 2017 1098-T (with only Scholarship or Grants included) information if my education expenses were paid and claimed in 2016?

I received a 2017 1098-T with only a Scholarship or Grants value (Box 5).  Everything else was blank.  I graduated in May 2017 and paid for Spring 2017 tuition in December 2016.  The scholarship amount was posted in 2017.  The amount that I paid in December was included in the 1098-T for 2016.  Now, it looks like I have an income of the scholarship amount for 2017, which is incorrect.  How do I go about filing this without being taxed on the scholarship amount as income, which was suppose to be tax free?  If my 2017 expenses/tuition was already claimed in 2016, can I ignore the 1098-T for 2017 even though I received it from school?


1 Best answer

Accepted Solutions
KrisD
Intuit Alumni

Do I need to include my 2017 1098-T (with only Scholarship or Grants included) information if my education expenses were paid and claimed in 2016?

You say you paid for the  2017 classes in 2016, but this cannot be true if the scholarship posted on the 2017 1098-T. This indicates that the scholarship posted and paid in 2017

This would be reported if the amount of education expenses that were billed in 2016 were used for an education credit. Your situation seems to be that the school billed (Box 2) in 2016, but the scholarship paid that expense in 2017 (Box 5). You will need to look at your school account statements (for 2016, 2017) the 1098-T's (2016,2017) and your 2016 tax return. Make sure the expenses paid with the scholarship were not used to claim a credit on your 2016 tax return. The credits are based on what is paid in the tax year. 

If you properly adjusted your reporting in 2016 to claim only the expenses that were paid, not merely billed, you will not need to report the 2017 1098-T if it paid for classes that started in 2017.

If you did receive a credit in 2016, but the expenses for 2017 were not needed for the credit, therefore they were not used, you do not need to report the 1098-T if the amount in Box 5 paid for classes that started in 2017.

If any of the scholarship in Box 5 was refunded or used for something other than education expenses, the excess tax-free assistance will need to be reported as taxable income by the student. 

Finally, if a credit was taken on your 2016 tax return and those same expenses were paid in 2017, you might need to "recapture the credit". 

According to the IRS:

“Credit recapture. If any tax-free educational assistance for the qualified education expenses paid in 2017, or any refund of your qualified education expenses paid in 2017, is received after you file your 2017 income tax return, you must recapture (repay) any excess credit. You do this by refiguring the amount of your adjusted qualified education expenses for 2017 by reducing the expenses by the amount of the refund or tax-free educational assistance. You then refigure your education credit(s) for 2017 and figure the amount by which your 2017 tax liability would have increased if you claimed the refigured credit(s). Include that amount as an additional tax for the year the re-fund or tax-free assistance was received.”

 

In TurboTax:

Type   recapture education deduction   into the search box located at the top right of the screen

Click on the “Jump to recapture education deduction” link

CLICK HERE for IRS Pub 970 Education Credits

View solution in original post

1 Reply
KrisD
Intuit Alumni

Do I need to include my 2017 1098-T (with only Scholarship or Grants included) information if my education expenses were paid and claimed in 2016?

You say you paid for the  2017 classes in 2016, but this cannot be true if the scholarship posted on the 2017 1098-T. This indicates that the scholarship posted and paid in 2017

This would be reported if the amount of education expenses that were billed in 2016 were used for an education credit. Your situation seems to be that the school billed (Box 2) in 2016, but the scholarship paid that expense in 2017 (Box 5). You will need to look at your school account statements (for 2016, 2017) the 1098-T's (2016,2017) and your 2016 tax return. Make sure the expenses paid with the scholarship were not used to claim a credit on your 2016 tax return. The credits are based on what is paid in the tax year. 

If you properly adjusted your reporting in 2016 to claim only the expenses that were paid, not merely billed, you will not need to report the 2017 1098-T if it paid for classes that started in 2017.

If you did receive a credit in 2016, but the expenses for 2017 were not needed for the credit, therefore they were not used, you do not need to report the 1098-T if the amount in Box 5 paid for classes that started in 2017.

If any of the scholarship in Box 5 was refunded or used for something other than education expenses, the excess tax-free assistance will need to be reported as taxable income by the student. 

Finally, if a credit was taken on your 2016 tax return and those same expenses were paid in 2017, you might need to "recapture the credit". 

According to the IRS:

“Credit recapture. If any tax-free educational assistance for the qualified education expenses paid in 2017, or any refund of your qualified education expenses paid in 2017, is received after you file your 2017 income tax return, you must recapture (repay) any excess credit. You do this by refiguring the amount of your adjusted qualified education expenses for 2017 by reducing the expenses by the amount of the refund or tax-free educational assistance. You then refigure your education credit(s) for 2017 and figure the amount by which your 2017 tax liability would have increased if you claimed the refigured credit(s). Include that amount as an additional tax for the year the re-fund or tax-free assistance was received.”

 

In TurboTax:

Type   recapture education deduction   into the search box located at the top right of the screen

Click on the “Jump to recapture education deduction” link

CLICK HERE for IRS Pub 970 Education Credits

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