Confused 1098T

Forum|Forum|3 months ago
February 26, 2026
1 reply
1 view

Hello, I just received my daughters 1098T (the college had a glitch). I wasn't expecting for box 5 to be larger then box 1 so now I'm wondering if we are going to have to pay taxes on part of her scholarships. Box 1 is $19350.00. Box 5 is $21203. $2009.00 of that amount was given by the school as a res grant for staying on campus. $3525.00 of that amount is outside scholarships and says it can be used for tuition or room and board. The rest of the scholarship doesn't state how it has to be used. I've been reading a lot and I know there are a few loopholes but the more I read the more confused I get. Her room and board, of course, are not in box 1 but we did use her 529 plan to finish paying what the scholarship did not cover. I'm hoping we won't have to pay taxes on this amount but I was also hoping we would qualify for the AOC but that might not be possible because we used the 529 plan and I know you can't double dip. Can you please help?

Hal_Al

Level 15

Yes, she will have to declare some of that scholarship as income. Depending on how much other income she has, she probably will not owe any tax or even have to file.

Yes, you can claim the AOC, unless high income disqualifies you. Using the 529 plan does not disqualify you. Room and board are qualified expenses for the 529 distribution, but not for the AOC or tax free scholarship. Worse case: you a pay a little tax on the 529 earnings or she makes a little bit more of the scholarship taxable, and those are unlikely.

For details, see this post on the five main points on the 1098-T:

https://ttlc.intuit.com/community/college-education/discussion/re-what-do-i-do-with-form-1098t/01/3760212#M63114

twoenoughAuthor

Level 2

ok, it sounds like I need to put part of the scholarship on her income tax form and part on mine correct? (she is my dependent) If this is true she had a small job and earned $6000 and she already filed her taxes to get her refund. Do I need to file an adjustment? Do we put the overage amount plus the $4000 for AOC on her taxes so that I can claim the AOC?

Hal_Al

Level 15

Q. It sounds like I need to put part of the scholarship on her income tax form and part on mine correct?

A. No. All of the taxable scholarship goes on her return. You only enter the 1098-T to claim the AOC. The simple way to do that is enter a 1098-T with $4000 inbox 1 and box 5 blank. You are allowed to do that. For an explanation, see the "Five points of the 1098-T" link.

Q. Do we put the overage amount plus the $4000 for AOC on her taxes so that I can claim the AOC?

A. Yes.

Q. She had a small job and earned $6000 and she already filed her taxes to get her refund. Does she need to file an amended tax return (adjustment)?

A. Technically no. But you want to anyway just to document all this. The reason she doesn't need to file an amendment is that the $6000 wages + $4000 + $1853 excess scholarship = $11,853 which is less than the $15,750 filing requirement. She will not owe any tax or have to give back any of her refund.