Graduate Student paid through 1098-T, issues with turbo tax reporting too much income and Roth IRA giving a penalty

[clpetix]

I am a graduate student who is paid through a 1098-T. My 1098-T reports the my tuition which is paid for by my department in box 1 (lets say 40K). In box 5, my tuition + my stipend is listed as scholarship (say 80K). Turbotax is reporting this value in box 5 as income, saying my total income is 80K. It should be subtracting my qualified education expenses of 40k in box 1. 

It is also not counting this excess value as income for the purposes of contributing to my Roth IRA. This is supposed to be allowed because of the Graduate Student Savings Act. 

Any help remedying these would be greatly appreciated. I believe other softwares allow for this, but I would like to avoid changing if possible. 

[Hal_Al]

TurboTax is aware of the Roth IRA glitch and is working on it. 

Be sure you have  checked the grad school box at the 1098-T screen. Starting in 2022, taxable scholarship goes on line 8r of Schedule 1, instead of  line 1 of form 1040.

As to the duplication of the $40K income, it may only be necessary to check you entries.  I'm not aware of a glitch. 

[bmatty]

I am having the same issue with the Roth IRA. It worked for 2021. When chatting with TurboTax, I was told this was an IT issue that would be resolved by the end of January, but it still has not been.

[MichaelG81]

Yes, for fellowship income reported on a 1098T, it isn't currently allowing ROTH IRA contributions. This is currently confirmed as an issue and is actively being resolved.‌

Click this link to sign-up for notifications for progress updates. Rest assured, TurboTax is working on this issue for our customers. It may erroneously attach a penalty on your contribution lowering your refund or increasing your tax due, and stating you have an excess contribution based on fellowship income. Once fixed you will be notified. 

Also, for grad students and post-doctoral students, the only qualified expenses are materials purchased from the school directly and tuition. It should also be noted on your 1098T, but if not there you can still put material purchased from school for the Lifetime Learning Credit in the 1098T section interview. The taxable amount is the difference of Box 5 minus Box 1; basically. Graduate students don't qualify for AOTC and aren't able to purchase material outside the school. As Hal_AL stated taxable fellowship income is now reported on Sch 1 line 8r.

Lastly, thank you for your patience into this and helping TurboTax start to resolve this issue by notifying us.

@clpetix 

@bmatty