How should I enter my 1098-T into TurboTax Free File?

[isealbz]

I am a PhD student. Ordinarily, my university pays me to work as a Teaching Assistant, and this income is reported on a W-2 form.

However, in Spring 2019, I was awarded a fellowship that included a stipend, tuition/fees contribution, and money for health insurance. Moreover, in Fall 2019, I was awarded additional money for teaching the first month of a course when the professor fell ill. All of this information was reported on a 1098-T form rather than a W-2 form.

Am I entering the information correctly?

The crucial steps seem to be:

1. Click "Yes" to "Did you have any higher education expenses in 2019?"
2. Click "Add a Student" and click "Yes" to "Did you get a 1098-T for the year 2019?"
3. Upload my 1098-T PDF.
4. TurboTax automatically enters the following: $12,812.62 for Box 1; $0.00 for Box 4; $28,314.00 for Box 5; Box 7 ("Box 1 includes amounts for an academic period beginning January - March 2020") is unchecked; Box 8 ("At least half-time student") is checked; Box 9 ("Graduate student") is checked; $0.00 for Box 10 ("Insurance contract reimbursement refund").
5. Click "Yes" to "Did You Receive Any of the Following Tax-Free Benefits Last Year? GI Bill benefits, Veterans' benefits, tax free employer provided assistance."
6. It asks me, "What portion of the $28,314 from Box 5 on your 1098-T is from veterans' benefits and/or tax-free employer provided assistance?" I enter $13,057, which is the sum of the amounts listed under "Scholarships (tuition and fees)" and "Tuition waivers and exemptions" on my 1098-T (see below).
7. Click "Yes" to "Did You Receive a Scholarship or Grant in 2019?"
8. It says, "Enter the amount you received. Don't include amounts already listed on a W-2 or other tax form." It already lists $15,257 (= $28,314 – $13,057) under "Scholarships/Grants/Fellowships listed on 1098-T." I re-enter the aforementioned $13,057 under "Employer-Provided Assistance."

However, it is unclear to me whether the $13,057 included in Box 5 for "Scholarships (tuition and fees)" and "Tuition waivers and exemptions" counts as "tax free employer provided assistance."

If not, then I'm wondering whether I need to enter the full $28,314 into TurboTax at Step 4, even though I never received $13,057 of it (it was automatically applied to my tuition/fees). If I enter the full $28,314 without claiming any tax free employer provided assistance, then TurboTax shows that I owe ~$1,000, which seems really off.

Here is the breakdown of $12,812.62 from Box 1:

• $8,674.00 for Tuition and fees payments for Spring 2019
• –$122.19 for Excluded payments-trans & med services for Spring 2019
• $8,847.00 for Tuition and fees payments for Fall 2019
• –$4,464.00 for Excluded payments-tuition reduction pmt for Fall 2019
• –$122.19 for Excluded payments-tuition reduction pmt for Fall 2019

Here is the breakdown of $28,314 from Box 5:

• $15,257.00 for Scholarships from ss1 for 2019
• $4,376.00 for Scholarships (tuition and fees) for Spring 2019
• $4,298.00 for Tuition waivers and exemptions for Spring 2019
• $4,383.00 for Tuition waivers and exemptions for Fall 2019

Your feedback would be much appreciated!

[MarilynG1]

If your Box 5 amount on your 1098-T includes what would normally be reported on a W-2, you will still be reporting it as income; just 'Other Income' instead of 'Wages'.

The difference between Box 1 and Box 5 (and any other Books or Related Fees) will be the taxable other income.

Just enter the 1098-T as it is shown, and TurboTax will put the Other Income in the right place.

Click this link for more info on How to Report Fellowship Stipend. 

[isealbz]

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If your Box 5 amount on your 1098-T includes what would normally be reported on a W-2, you will still be reporting it as income; just 'Other Income' instead of 'Wages'.

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How do I determine whether an amount would "normally" be reported on a W-2? For example, some of the amount was paid to me for substitute teaching for a month, but this money was awarded to me as a scholarship payment rather than reported on a W-2 (presumably for bureaucratic reasons). Would such an amount normally be reported on a W-2? 

The difference between Box 1 and Box 5 (and any other Books or Related Fees) will be the taxable other income.

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Even if a portion of the money from Box 5 was specifically designated for "tuition and fees" and "tuition waivers and exemptions" and I never actually received that portion of the money?

[MarilynG1]

Click this link for instructions on How to Enter a 1098-T.

[isealbz]

As far as I can tell, the content on that link doesn't actually contain answers to any of my questions. To put it as briefly as possible, my questions are:

1.  Does the $13,057 included in Box 5 for "Scholarships (tuition and fees)" and "Tuition waivers and exemptions"—which was paid to the school and I never received—count as "tax free employer provided assistance"?
   
2. If it doesn't count as "tax free employer provided assistance," do I need to report the full amount included in Box 5 ($28,314 = $13,057 + $15,257), or just the amount that wasn't designated for "Scholarships (tuition and fees)" and "Tuition waivers and exemptions"? 
3. If I do need to report the full amount included in Box 5, given that $13,057 of that amount was listed for "Scholarships (tuition and fees)" and "Tuition waivers and exemptions," should I select "this is not what I paid to this school" and then add that $13,057 to the $12,812.62 included in Box 1 for a total of $25,869.62 and report that total as "the full amount of tuition paid to [my university]," including "all amounts paid by you, someone else, scholarships, fellowships and student loans"? 
   

[KrisD15]

No, only tax-free employer assistance counts. An employer can pay  up to 5,250 towards an employee's tuition and the employee does not need to claim it. Employee Assistance and Veteran's Assistance must be applied to tuition. Scholarships and Pell grants can be allocated in several different ways, against the tuition (making it tax-fee) or for room and board (making it taxable but freeing up expenses for a possible credit).

Box 1 should report what was paid to the school. It should not need to be altered, but if it does, that would be the way  to do it. 

Don't enter amounts twice, if an amount is already on the 1098-T, don't enter it again. If you have employer assistance on your W-2, don't enter that a second time either. 

If the school reported the reduction in Box 5 and also subtracted it out of box 1, then they reported it wrong and yes, you would adjust for that. 

IRS Pub 970 can be very helpful.

IRS Pub 970

[Hal_Al]

This is simpler than you're making it.  Enter the 1098-T and nothing else.  Your income is the box 5 amount minus the box 1 amount; $28,314 - 12,813 = $15,501*.  The good news is: it's reported as scholarship income**(line 1 of form 1040 with SCH notation) and not subject to FICA tax, as wages would have been. 

None of it is  reported as employer assistance and none is  eligible for $5250 tax free.

*The previous comment about "normally included on a W-2"is irrelevant. The school put it in box 5 and that's all that matters

**The distinction between "scholarship income" and "other income"  is only important, if you can be claimed as a dependent, by someone else.  It affects the standard deduction calculation.