Reporting Excess financial aid

[awhite1404]

For 2019 I am 19 in college and have about $2700 in excess financial aid on top of money i earned on a W-2 and Social security benefits, so I have to file taxes this year. I do not know where to report my excess financial aid for it to be counted under income. I tried child's income form 8615 and after putting in my parents information it now tells me that I do not have unearned income over $2200 so it does not apply. I also reported my 1098T under deductions, but I did not know whether this needed to be reported under income too. Can someone tell me how I make sure my excess scholarships are counted in my income?

[KrisD15]

If you entered the 1098-T already, just adjust box 1 to 0 and enter the amount you need to claim in box 5. 

If the program does not like that, enter $1 in box 1 and add one dollar to the amount you need to claim in box 5. 

Done. 

In reality, you wouldn't enter the 1098-T, just the amount you need to claim as a scholarship in that same section (education) but the end result will be the same. If you have the 1098-T already in the program, just use that as the vehicle, but change the numbers so only the amount you need to claim is listed. 

That will work, the numbers will flow to the 1040, and you should see the amount you need to claim included in line 1 of your 1040. 

[awhite1404]

I tried this and I think it had the same effect. Should I be reporting the 1098T under deductions sections or income section? I am currently reporting it under deductions. When filing the 1098T it asked if any of the scholarships reported in box 5 were included in income, and I said no, but this still had no effect on what shows under my income. Is this because the $2700 excess is low enough that it does not count?

[NCperson]

you tried what was advised and what SPECIFICALLY occurred?  what do you mean it had the same affect? You should see the scholarship on the Line 1 (wages) of form 1040 with the word 'SCH" listed. 

[Hal_Al]

You MAY not have to report that at all.  How much is your W-2 wages? Was there withhoding in boxes 2 and 17 that you need refunded? How much is your SS? Do your parents claim you as a dependent? 

On the other hand, you may need to report more than $2700, so your parents can claim the tuition credit.

[awhite1404]

I entered the 1098T under the education category in deductions. Turbo tax asked for box 1 and box 5 on the 1098, which showed $10,500 in scholarships and $7,745 for tuition. In deductions, education now says "Expenses and scholarships" as $0 and is still not showing under my income on a 1040. In income, however, I do have a W-2 of $5700, social security of ~$4000, and interests and dividends of about ~$100 in total. I assumed from what the person above had said that once I entered my 1098T under deductions, I would them have a 1040 in income with the difference between scholarships and tuition but this is not the case, even after reentering. In deductions I have $6 from working and $8,800 as a standard deduction. Do these other deduction maybe affect why the scholarships are not showing up under income?

[awhite1404]

I am also claimed as a dependent by my parents.

[KrisD15]

If your parents claim you, they might want to enter the 1098-T into their TurboTax program. Even though you had more scholarship than tuition, they MIGHT get a credit however you MIGHT have to claim more scholarship income in that scenario. 

Check with your parents first, but if you just want to claim the difference as income, delete the 1098-T and enter the amount of the scholarship you are claiming as income in the education section, yes under Deductions & Credits. 

$7,745 tuition in Box 1 does not include books and fees, so you might want to add that before subtracting from the $10,500 scholarship to get the taxable amount. Also, look at IRS Pub 970 to gain a better understanding of what you are doing and what your parents could do. 

IRS Pub 970

Delete the 1098-T.

Click Tax Tools, then Tools, then delete a form, then scroll down and delete the 1098-T and all education worksheets

Go back through the Education section, but don't enter anything until you get to the "Did you receive a scholarship or Grant in 2019?"

Say "No", you did not get a 1098-T

Say "No" you do not have an exception

Continue to say "No" to expenses

When you get to the "Did you receive a scholarship or Grant in 2019?" screen, click "Yes" and enter the amount of taxable income

SEE SCREENSHOT

Click Continue 

Continue through the interview, but don't enter any other expense or scholarship information. 

The amount will be on your 1040, line 1 with "SCH" before the amount

Check it:

Click Tax Tools, Tools, View tax summary on the screen, Preview my 1040 that now appears on the left side bar, scroll down to 1040 line 1

SEE SCREENSHOT 

[NCperson]

@awhite1404 - let me try and provide a more concrete approach to go with @KrisD15 response.

Option 1: post the 1098T just like you see it in YOUR tax return.  Follow @KrisD15 steps.  The only things you can add to Box 1 are books REQUIRED for classes that were not purchased through the school.  It is unlikely there are any additional fees you can add as college would have already included required fees in Box 1. 

Option 2: if you parents are eligible for AOTC, then a) YOUR parents post the same amount as you posted in Option 1 for Box 1 and b) YOUR parents REDUCE Box 5 by enough so that Box 1 exceeds Box 5 by EXACTLY $4000.  They claim AOTC for $2500; this is a credit.  Then whatever your parents reduced box 5 by is the same amount YOU include on a 1098T on YOUR tax return.  YOU are to leave Box 1 blank.  This will increase your earned income but the tax you pay will be MUCH LESS than your parents benefit by taking AOTC for $2500, so your family comes out ahead with this approach,