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Received Scholarship AND Loans but…

If my 1098-t form has my scholarship/grant but is missing my loans what do I do? Do I just add my loans as a part of my additional expenses along with my textbooks?

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3 Replies
Hal_Al
Level 15

Received Scholarship AND Loans but…

You do not enter anything about your loan money. The existence of a loan is not relevant, as anything paid by loans, is the same as paid by you or your parents.  What matters is what expenses were paid for. 

 

So, yes, you just enter your additional expenses, like  textbooks and a required computer. Room and board are not qualified expenses, unless you also had a 529 plan distribution. 

Hal_Al
Level 15

Received Scholarship AND Loans but…

If you are a dependent, your parents claim the tuition credit, not you. They are allowed to enter your 1098-T, on their tax return.  Even if you are not a dependent, there are restrictions on a full time, unmarried student, under 24, claiming the refundable portion of the American Opportunity credit. 

Vanessa A
Employee Tax Expert

Received Scholarship AND Loans but…

No, you do not report your student loans on your return.  When you report the additional expenses such as your textbooks on your return, you are basically saying I used this much more money than was reported on my 1098-T box 1 for my education.  It doesn't matter if it was a loan or paid out of pocket.  Student loans do not give you any sort of tax break until they are in repayment and then you may be able to deduct your Student Loan Interest

 

The number in box 1 is a combination of payments made to the school by you or on your behalf through loans and scholarships and grants.  Your loans need to be paid back.  It is not taxable income even if you don't use them for eligible education expenses.   On the other hand, if you use the grants and scholarships for anything but your eligible education expenses, then these go from being nontaxable income to taxable income.  This is why they are reported on your 1098-T.  If box 5 is greater than box 1, then the overage in box 5 may become taxable income. 

 

Also, if you are the student claimed as a dependent on your parents return, your parents may be able to enter your 1098-T on their return to claim either the  Lifetime Learning Credit or American Opportunity Tax Credit.

 

Who enters the 1098-T on their return

Taxes for Grads: Do Scholarships Count as Taxable Income?

Topic no. 421, Scholarships, fellowship grants, and other grants

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