I have left over pell grant money and scholarship money in savings. I received 1098T for grant from school, but nothing for scholarship check. Do I have to report? How?

[lunivincent]

So I got left over pell grant money for 2019 and a scholarship check from my old school district  that I deposited in my savings. I do not have the check with me, and I did not receive any sort of forms for the check from the distributor, nor have I yet spent that money. I received a 1098T from my school that reports the total tuition and the overall amount of money of grants I received. I inserted that in my turbo tax return. My question is will turbo automatically count the left over money from pell grants towards my tax return or do I have to insert the amount on my w-2? Also the scholarship money that I don’t have any form for, what do I do? Do I report it ? Where on the tax return do I report it and how ?

[Hal_Al]

You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. 

That said, the general rule is that the taxable amount of Scholarship is the difference between box 5 and box 1 on your 1098-T, unless you records show differently. 

Q. Do I have to report? 

A.  Excess scholarship (the amount that exceeds qualified educational expenses) is taxable.

Q. How to report it?

A.  Line 1 of form 1040.  Do not add it to your W-2.  Instead, in TurboTax (TT), enter your 1098-T at Deductions and Credits / Educational expenses.  Do not enter any other numbers**.  TT will automatically calculate the taxable portion from the 1098-T.

**If you book, and other course materials, expenses  not included in box 1 of the 1098-T, then you should enter that  to reduce the taxable amount .  Books will come up, in the interview.

[Hal_Al]

Are you a dependent on your parent's tax return? If so, the answer is slightly different. 

There is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, the parents  (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.

Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.

[lunivincent]

What if my mother did not include that in Her tax returns? And Yes I am a dependent and she claimed me as one in her tax return, I also worked for about 2 months of the year of 2019. I’m doing this myself because I won’t be getting much back so there’s no point to pay a lot of money for someone else to do it. I just need to know exactly where I would report the scholarship money I received that I am saving and the left over grant money. Thank you. 

[AmyC]

Since your mother claimed you, any education credit would go on her return. However, she may have enough income to not qualify for any credit. She can amend and claim the credit, if eligible. If not, you only need to claim the difference between the tuition plus required expenses and your scholarship/grant income.

Example: $10,000 tuition on 1098T plus extra costs for books and supplies of $1,500 = $11,500 vs scholarships and grants of say $25,000. Then $13,500 would be taxable income to you.

Since it goes to the wages line, you will follow these steps to report:

1. Go to federal section
2. go to personal income
3. you may need to show all income
4. scroll down to the last section, Less Common Income
5. select the bottom option, Miscellaneous Income, 1099-A, 1099-C, START
6. the top option, Other Income Not Already Reported on a Form W-2, START
7. Other Wages Received screen, select YES
8. Household employee, continue past
9. Sick or Disability pay, continue past
10. Any Other Earned Income screen
11. Did you earn any other wages, , select YES
12. Enter Source of Other earned Income, select Other
13. Continue
14. Enter description, scholarship & grant
15. Enter amount of income under your name
16. Done