I have a form 1098 t and I’d like to put that in but don’t know how

[DanaB27]

Please see the instructions below on how to enter your 1098-T if you haven't visited the Education section yet:

1. Open (continue) your return, if you don't already have it open.
2. Search for 1098t and then select the "Jump to" link or "Go to" button at the top of your search results.
3. On the Your Education Expenses Summary screen, select Add A Student.
   • If you get taken to a different screen, skip to Step 6.
4. Select the student whose name is on the 1098-T and answer the questions that follow (the type of degree, full-or half-time, etc.)
5. After you enter the name of the school, the next screen will ask if that school sent you a 1098-T. Answer Yes and proceed.
6. If you've already gone past the 1098-T screen, the "jump to" and "go to" functions will take you to Now let's gather additional education expenses or a different screen. Just keep going until you reach Your Education Expenses Summary. On this screen you can either:
   • Select Add A Student if you need to enter a 1098-T for someone else (and then resume steps 4 and 5 above); or
   • Select Edit for the student in question, and then either the first Edit button on the next screen (to revisit the 1098-T for a previously-entered school) or Add New School to enter a new 1098-T.

Some important tips about entering this form:

• Parents: If the student listed on the 1098-T is your dependent, enter the 1098-T on your return – even if your dependent paid the tuition.
• Students: If you're not being claimed as a dependent, you can enter the 1098-T on your return regardless of who paid the tuition unless it was your employer. In that case, just keep the 1098-T with your tax records.
• Enter your 1098-T exactly as is even if the amounts are wrong (this is common). You'll get a chance to correct this info and enter additional expenses later in the Education interview.
• Leave blank boxes blank. Don't enter 0 for any blank boxes on the form, as this generates errors.

[cindyh222]

"Enter your 1098-T exactly as is even if the amounts are wrong (this is common). You'll get a chance to correct this info and enter additional expenses later in the Education interview."

This is what I am confused about for our tax situation.  Can you correct the expenses and scholarships? I am having trouble interpreting the meaning of some of the questions and how to respond.

In our situation, we have a freshman whose 2019 1098-T included Fall 2019 and Spring 2020 qualified expenses. The Spring 2020 expenses were paid in Spring 2020.  Do I include Spring 2020 on 2019 taxes as it shows on the 1098-T? 

On the same 1098-T, another problem I have is the scholarships reported.  Only part of her scholarships for her Spring 2020 semester showed up on the 2019 1098-T.  So, if we report Spring 2020 qualified expenses in 2019, there will be scholarships that we won't be able to match with expenses for the 2020 tax year, not considering Summer/Fall 2020 qualified expenses.

For 2019, if we keep the information just like it states on the 1098-T, we will have more than enough to meet the amount needed to figure the Amer Opp Tax Credit.  But, just looking at the Spring 2020, we will already be in a hole if the scholarships are not matched the same.

In addition, to add a little further complication, she received a scholarship that went straight to her bank account with no stipulation on how to use it.  I am assuming the best thing to do is to use it toward NON-qualified expenses.  Would that scholarship be reported on our return or hers?  There was no tax form received.  If we include it on our return, I would think we would need to report the unqualified expenses as well.

Thank you in advance for any experience that can be shared.

Cindy

[KrisD15]

@cindyh222

"In our situation, we have a freshman whose 2019 1098-T included Fall 2019 and Spring 2020 qualified expenses. The Spring 2020 expenses were paid in Spring 2020.  Do I include Spring 2020 on 2019 taxes as it shows on the 1098-T?"

Box 1 on a 1098-T reports what was PAID to the school in the tax year (2019). Spring 2020 could have been BILLED (Box 2) in 2019, but only what was paid in 2019 should be in Box 1. Make sure the school reported the 1098-T correctly. You can click the "What if this is not what I paid" link under Box 1 on the 1098-T screen and adjust if needed. 

"On the same 1098-T, another problem I have is the scholarships reported.  Only part of her scholarships for her Spring 2020 semester showed up on the 2019 1098-T.  So, if we report Spring 2020 qualified expenses in 2019, there will be scholarships that we won't be able to match with expenses for the 2020 tax year, not considering Summer/Fall 2020 qualified expenses."

You do need to keep track of the student's expenses and scholarships using the student's school account statements. If you will need the expenses next year, reduce that amount from the expenses you use for a credit this year. Here is what the IRS Says:

"Refunds received after 2019 but before your income tax return is filed. If anyone receives a refund after 2019 of qualified education expenses paid on behalf of a student in 2019 and the refund is paid before you file an income tax return for 2019, the amount of qualified education expenses for 2019 is reduced by the amount of the refund."

To make things more complicated, if the scholarship can be allocated to room and board in 2020, rather than tuition and fees of 2019, that would be an option for you. It would make the scholarship taxable for the student to report, but you would have more expenses for a credit. 

Yes, the scholarship the student received direct deposit would need to be claimed by the student. If fact, any taxable scholarship would be claimed by the student, but you would first enter that same information in your TurboTax program so that your program can do the math. 

Below is a link to IRS Pub 970. It has easy to understand examples of getting the best bang for your education buck. 

The main things to remember:

The American Opportunity Tax Credit is worth the most, maxes out at 4,000 expenses (so more expenses allocated to that credit in a tax year is silly) but can only be claimed 4 times per student. The Lifetime Learners Credit can use up to 10,000 in expenses, but is usually worth less.

Expenses can't be used for more than one thing, credit OR tax-free assistance (scholarships).

Only expenses paid in the tax year can go towards a credit for that year. 

Scholarships can cross the calendar year, just don't use the expense it paid twice. 

IRS PUB 970

IRS PowerPoint

[cindyh222]

My daughter's 2019 1098-T, Box 1, is the amount paid for Fall 2019 and billed for Spring 2020.  The scholarships, Box 5, includes all the fall 2019 scholarships and part of the Spring 2020 amounts.  The rest of the Spring 2020 scholarships I was told will be on her 2020 1098-T.  I talked to the school about it, and they will not change it.  So, is it acceptable to change the amounts from what is on the 1098-T?

[AmyC]

@cindyh222 You can't change the numbers but what you do with them, matters.

What you do depends on the numbers.

Example 1: Box 1 is bigger than box 5.  Your expenses were greater than your grants. Parents take the 1098T and the education credit, if eligible. The difference between box 1 and box 5 would be the education expenses.

Example 2: Box 1 is bigger than box 5.  Your expenses were greater than your grants. Parents take ALL of the education expenses(box 1) and you include box 5 in your income. This only works if your parents can claim the education credit. The credit to them is usually more than a little or no tax to you. Nobody uses the 1098T itself, just the information split between you.

Example 3: Come up with some combination of the first two that gives one of both of you the most advantage.

Example 4: Box 5 bigger than box 1. You take the 1098T onto your student return. You have income of the difference. Nobody gets a tax credit.

IRS and Turbo Tax links:

What's the income limit for the American Opportunity and Lifetime Learning Credits?

What education tax credits are available?

Why didn't I get a credit or deduction for education expenses?

If a parent claims me as a dependent, can I claim the education tax credit?

What expenses qualify for the American Opportunity Tax Credit and which ones do not?

Who is eligible to take the American Opportunity Tax Credit?

Turbo Tax college education discussion

Form 8863

Qualified Expenses

IRS Q & A about education credits

Tax Benefits for Education: Information Center

Why is my scholarship taxable?

[cindyh222]

I have a feeling so many do things differently.  The 1098T and our personal financial records do not match, but they are only timing differences.  It sounds like many recommend going with the exact numbers on the form.  I have heard other say ignore the form and go with what you paid.

Whichever way we decide to go, do the decisions you make the first year, lock you into that method for the following three years?

Thanks all!

[JotikaT2]

I recommend reporting your 1098-T as reported to you as the IRS also has a copy of the form and will look for any discrepancies.

There are options in regards to tuition expenses and scholarships and when those are reported on a 1098-T form versus the term they apply to.

You can make an adjustment in the input to ensure your scholarship income is only being reported against your 2019 education expenses.  

You would then need to include this amount in scholarship income when you prepare your 2020 Income tax return.

If there are additional expenses you paid during 2019 that are not reported on a Form 1098-T, you can also add them under the Here's Your Education Summary page.

Whatever method you use, be sure to be consistent so you only report any tuition expenses one time per year.  You do not want to make the error of claiming more expenses than were paid.  This could result in an adjustment to your returns if the overstatement of expenses is investigated.