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Scholarships or portions of scholarships may be taxable. It all depends on how you use them. To quickly get to that section of TurboTax, type scholarships in the search and and select the Jump to scholarships.
If your financial aid is reported in Box 5 of your 1098-T form, it'll be accounted for when you enter your 1098-T.
Otherwise, we'll ask about scholarships, grants, assistance (etc.) towards the end of the Education interview. Look for the screen Did [student name] receive a scholarship or grant in 2020? Select Yes and then enter the amount received in the appropriate field.
If you use your scholarship to pay for any of these, it counts as income and the amount paid is taxable:
If you're getting a degree at an eligible school, your scholarship is tax-free when used for:
What are you trying to do?
Are you a dependent on your parent's taxes? Did they claim the tuition credit based on your education.
The simple answer to you question is just enter your 1098-T. If box 5 is more than box 1, TurboTax (TT) will treat the difference as taxable income. If you other qualified expenses other than what's shown in box 1, the TT interview will give you a chance to enter them and TT will adjust the taxable amount. TT puts the income in the right place on the tax forms (line 1 of form 1040 with the notation “SCH”).
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