My daughter is a grad student. Is her taxable amount the difference between Box 5 and Box 1 on her 1098T? Are there reasons the taxable amount would be adjusted?

[SDin]

Her tuition is covered by a fellowship and that amount is shown in Box 1.  Box 5 appears to include her tuition plus her monthly stipend.  In my mind, her taxable amount would be the monthly cash stipend she receives.  However the difference between Box 5 and Box 1 is greater than the stipend and therefore it is taxing her on a larger number.  Can the taxable amount be adjusted to be what I think it should be or does she have to pay taxes on the amount that box 5 exceeds box 1?  No one at the University is able to tell her what other items may be included in Box 5.  

[Vanessa · Accepted solution]

Yes, her taxable amount is the difference between box 5 and box 1

Box 5 includes scholarships, grants, fellowships and other "free money" awarded for school

No, you cannot adjust the taxable amount.  If she received any additional scholarships that were in excess of her tuition this would also be taxable.  If she had other Qualified Educational Expenses you can enter them in the 1098-T section which will lower the taxable amount.