If spring scholarships posted in January 22 this year (last spring it was in December) can you override and claim them in 21 1098T

[AmyC]

Money paid in 2021 is used for the education expense. If you paid the spring tuition in December, then it would count in the year paid. However, if you were not billed until January 2022, that would be money spent in 2022 and would be claimed on TY 2022 return. Enter the 1098T as is.

The AOTC credit maxes out once you have paid $4000 out of pocket so it may not make a difference. The AOTC is only good for 4 years and most students have 5+ years because you begin and end part way through the year. There is also a lifetime learning credit which can be used to save more dollars for the AOTC in other years.

[Hal_Al]

Simple answer: yes.  But you need to be sure you are correctly  matching expenses to scholarship. 

The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or possibly your student has taxable scholarship income. 

You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. In the 1098-T screen, click on the link "What if this is not what I paid the school" underneath box 1. You will then be able to enter the actual amounts paid. You will also reach a screen that allows you to adjust the scholarship amount for "amounts not awarded for 2021 expenses".

Or if you find it easier, just change the numbers in boxes 1& 5 to what your records show. The 1098-T that you enter in TT is not sent to the IRS.

[SweetieJean]

@Hal_Al Do you have a citation for this?  TT Expert says otherwise.

[Hal_Al]

@SweetieJean  I'm not sure what "this" is.  But, no, I don't have a citation. 

The common situation is: the school shows the Spring 2022 tuition in box 1 of the 2021 1098-T but fails to show the Spring 2022 scholarship in box 5 because of their own administrative shortcomings.  Clearly there's a mismatch.  That's why TT has the two entries in the interview:  

"What if this is not what I paid the school" underneath box 1.

screen that allows you to adjust the scholarship amount for "amounts not awarded for 2021 expenses"

[lori700]

Thank you for your reply. Still a bit uneasy.

Other posts say you can't claim AOTC credit in 21 if you paid QHEE for 2021 in January 22. So moving scholarship income that posted in January 22 (not on 2021 1098T) seems similar. Is it a choice as long as nothing gets ear marked in two years? Or do I go with 1098T as is and next year will just have more scholarship than QHEE?

[lori700]

We were billed in December 21 with a due date of January 22...does this change the reply?

Your responses are always very clear to me...I have more questions I would love for you to review. Just trying to do this correctly and get good routine down each year with AOTC.

Example # if...  2021 1098T BOX 5 only shows Summer 21 scholarship $3100 and Fall 21 Scholarship $2900 = $6000 and BOX 1 shows QHEE payments =$9000 it appears AS IS that we would qualify for AOTC credit.

CONCERNS

• BOX 1 includes Health and Wellness Fee of $80.
• SPRING scholarships did not post till January 22 so not included in 2021 1098T -may cause taxable income next 1098T (2022) since scholarship not with QHEE expenses for that term.
• Move scholarships to income?
• Box 1 includes payment in 21 for 2020 December bill (spring 21) 

QUESTIONS:

1. Wouldn't I need to deduct the $80 from the possible AOTC credit amount since on pg 16/17 it states that type of fee is not QHEE for AOTC?

2. Wouldn't I add on REQUIRED books paid $500 in 2021 out of pocket to AOTC credit amount?

3. I have read that if I payed part of the Spring bill (billed December 21) in January 22 I can't claim those in the 21 AOTC credit..is this correct? Had I payed in December I could use in 21 AOTC credit calculation?

4. If I paid any expenses for 2020 (paid in January 21) that showed in Box 1 of my 2021 1098T do I subtract those when figuring my AOTC credit even if they were not used for credit purposes in 2020?

5. If Room and Board were paid with 529 (covering all non qhee expenses) can I still move some scholarship money to taxable income on my daughters return to claim AOTC credit? Or no since there are no "non qhee expenses" left that were paid by other sources?

Lots of questions. Thanks in advance.

[Hal_Al]

@lori700  said "Other posts say you can't claim AOTC credit in 21 if you paid QHEE for 2021 in January 22."

That's correct.

I'm not clear on what your situation is.  The  point, in my reply,  is only that you claim what you're allowed, based on your own records and not an erroneous 1098-T.  Tuition, paid by scholarship, simply cannot have the payment reported in one year and the scholarship reported in a different year.

You cannot claim the Spring 2022 tuition, on your 2021 tax return, unless you actually paid it in 2021.   Usually you cannot claim, for the AOTC,  Tuition paid by scholarship, unless you declare some of that scholarship taxable (and there are limits on doing that). 

[M_C_E]

My 1098T situation is that my son's school charged Spring '21 tuition in Dec '20 but applied the Spring '21 scholarship in '21.  This is causing the calendar year tuition and scholarships to be out of whack.  The '21 1098T Box 1 is 18,975 and the Box 5 is 19,950 so it looks like he got more than we had to pay.  All because of when the school decided to post the transactions.  If they posted the scholarship in '20 (like they did the tuition) then it would have balanced out and TT would realize we qualify for the AOTC.  

I tested by reducing the scholarship amount to match the corresponding tuition charged in calendar year '21 and TT then shows us getting the AOTC.  If you read the reply from Hal_Al in this posting he's making it seem like we should just enter whatever we need in order to make it all make sense but that's making me a little uneasy just like lori700 wrote.  

[Hal_Al]

@M_C_E  said: "If you read the reply from Hal_Al in this posting he's making it seem like we should just enter whatever we need in order to make it all make sense"

Not exactly.  You need to adjust the 1098-T numbers to what actually happened, usually what the billing statements show. 

Your situation seems to be stated more clearly than lori700's and using TT's screen that allows you to adjust the scholarship amount for "amounts not awarded for 2021 expenses"  is appropriate. 

[lori700]

@M_C_E  and @Hal_Al ,

I think M C E and I are poking at the same concern. To state my situation more clearly:

• College billed Spring QHEE December 21 
• College credited Spring Scholarship January 22 ( not in 2021 1098T)
• This makes 21 have AOTC credit and 22 have more scholarship than QHEE=taxable income.
• Payment History shows Spring Scholarship posted 1/4/22 and QHEE in 12/21. 
• To complicate it -I paid some of the QHEE for 21 in January 22 so guessing that can't go into AOTC credit figures either year. 

Is it best to calculate AOTC credit amount without manipulating the Spring Scholarships since they were not included on my payment history/1098T for 2021?

[lori700]

@Hal_Al 

"Your situation seems to be stated more clearly than lori700's and using TT's screen that allows you to adjust the scholarship amount for "amounts not awarded for 2021 expenses"  is appropriate. "

Where is this screen in TT? When I go in the only option I see is a box that states on Box 1 this is not what was paid and it just lets you enter new box 1 amount.  I am using TT Deluxe.

Thanks for all your help. Seems like this is a bumpy road for most parents to figure out.

[Hal_Al]

Q.  Where is TT's screen that allows you to adjust the scholarship amount for "amounts not awarded for 2021 expenses" ?

A. It's not included on the 1098-T screen where it lets you enter new box 1 amount.  It's several screens  later, in the scholarship section.  It says "Did (student's name) aid not include amounts awarded for 2021 expenses?" It goes on to say "Sometimes schools will not report education expenses and corresponding scholarship income on the same year's form 1098-T. Learn More"

Learn More  "Scholarship income must reduce qualified education expenses for each period of study that assistance is allocable to. However, sometimes scholarship income is not received at the same time education expenses were paid. This can cause your scholarship income to be overstated in one year and then understated in another year. If you received scholarships or grants in 2021 for expenses reported in a year other than the current year, enter an amount here to reduce your scholarship income amount. You will need to include that same amount as scholarship income in the tax year in which the education expenses are actually reported.

For example, in 2020 you received a 1098-T with $4,000 for your fall 2020 expenses which you reported on your 2020 tax return. In 2021 you received a 1098-T that included tuition expenses of $6,000 and $10,000 of scholarship income. $4,000 of the scholarship was actually for your 2020 expenses. You will enter $4,000 here to reduce your scholarship income to $6,000 for 2021. You may also need to recapture any education credit or deduction taken in 2020 that would have been disallowed in 2020 due to the additional $4,000 of scholarship income allocable to 2020 education expenses".

[Hal_Al]

@lori700 

Q. Is it best to calculate AOTC credit amount without manipulating the Spring Scholarships since they were not included on my payment history/1098T for 2021?

A.  YOU have to decide that.  That said, I read just the opposite. You were billed tuition in Dec 2021, but the tuition was not actually paid until 2022, when the scholarship was posted. You need to adjust (reduce the box 1 amount by the scholarship amount). And go thru the same rigmarole next year

Q. To complicate it -I paid some of the QHEE for 21 in January 22 so guessing that can't go into AOTC credit figures either year?

A.  Not necessarily. You made a payment in 2022. You can't count that for 2021, but you can still count it for 2022, (assuming you're billed for more tuition sometime if 2022).

[M_C_E]

@SweetieJean If your "citation for this?" is referring to the amounts to enter in form 8863 then the below may be what you're asking for and it comes from the Instructions for Form 8863 , page 4.  FYI, I bolded the line below.

You may receive Form 1098-T from the institution reporting
payments received in 2021 (box 1). However, the amount in
box 1 of Form 1098-T may be different from the amount you paid
(or are treated as having paid). In completing Form 8863, use
only the amounts you actually paid (plus any amounts you're
treated as having paid) in 2021 (reduced, as necessary, as
described under Adjusted Qualified Education Expenses, later).

By following the above, my corrected Box 1 amount is 29,550 as opposed to the school's form showing 18,975 so I'm closer to the reality of what actually transpired.  By the way, I confirmed with the school that their Box 1 amount is when they charged the account but the IRS goes by calendar year paid.  Now I know to not pay them in Dec but to wait until Jan.  

If your "citation for this?" is referring to @Hal_Al 's line of "The 1098-T that you enter in TT is not sent to the IRS" then I can't help other to say that the TT info might not be furnished but the actual 1098-T clearly notes:  This is important tax information and is being furnished to the IRS.

@Hal_Al thank you so much for spelling out the scholarship adjustment section.  I must have blown by that initially and didn't realize that was my opportunity to justify what happen with the issue of the tuition/scholarship timing.  

I think the take away with all of this is you fill in the amounts as showing on the 1098-T BUT you also have to clear up the confusion caused by the school (as Hal_Al so wisely noted "because of their own administrative shortcomings") by clicking on "What if this is not what I paid the school" and entering what was actually paid in '21 (ask the school for the account transaction history) and by adjusting the scholarship to match for when it was actually allocated for.  I did this and now TT sees that I qualify for the credit so my conscience is free and clear.  Thanks again Hal_Al!