1098-T issued that should be EXCEPTION

[mlbasham]

I am a senior citizen who audited a University class.  I paid no money.  The University waives all fees.  HOWEVER, the University issued a 1098-T with  an amount in box 1 - payments received AND an larger amount in box 5 Scholarships or grants.  If I enter this information the result is a tax liability.  The fact is that I did pay tuition or receive any funds.

When I read the IRS instructions for 1098-t , I believe the University should NOT have issued or filed. The instructions read: EXCEPTIONS - you do not have to file the the form or furnish statements for "students whose qualified tuition and related tuition and expenses are entirely waived"  I think they did this for their own record keeping.  

The question - is my best course of action to simply ignore having received the form and exclude from entering in Turbo tax?

[KurtL1 · Accepted solution]

The IRS has also been sent a copy of the form. If you do not include the form on your return you will be hearing from them in the future.

Per the Instructions on preparing the 1098-T it states there is an exception to filing the form if the students whose qualified tuition and related expenses are entirely waived or paid entirely with scholarships. (Page 2)

You need to contact the University and request a corrected Form 1098-T. You can provide a copy of the instruction in your request. When they send you the corrected form you can then file without the Form 1098-T on your return.

[Hal_Al]

You are correct.  The school made a mistake. If you can't get the school to correct it (and you probably can't) just ignore it.  The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. 

[mlbasham]

The irony is that I'm not looking for an educational tax credit. 

The concern is that the amount in box 5 is greater than the amount in box 1 which is what causes turbo tax to make it taxable.

  At this point, I edited the amount in box 1 to equal amount in Box 5 - since turbo allowed me to do that, and there is no effect on our taxable income.  I guess that's the same thing as simply not including the 1098T in the return

[Hal_Al · Accepted solution]

Yep. You're covered either way.