Senior year 1098T (scholarships, but no tuition?)

[ShakespeareGeek]

I'm googling and seeing versions of this question, but having trouble determining the answer for what I thought was our simple situation.

My daughter graduated college in spring 2024.  So we get her 2024 1098T and it has no tuition in Box 1 ... which I think makes sense because the 2023 version of that form does say that it represents the whole school year's tuition.

BUT -- box 5 does list the scholarship money that the school gave her.  If I just enter 0 for Box 1 and the actual amount in Box 5, suddenly TurboTax acts like she owes thousands of dollars, as if we did not use that money for qualified educational expenses. Believe me, it definitely went to tuition, we never saw a penny of it 🙂

How do I properly tell TurboTax that this money was used for the right purpose? She's still listed as a dependent for me so it's not even like she's taking the education credit, I'm just adding these forms to hers because (a) they're in her name and (b) that's what I've always been told to do, the software has always just told me "You (the student) don't get the credit because you're someone's dependent." I assumed that the same would/should happen here but I need TurboTax to know that tuition was paid. Or do I just not add this form to hers at all and not worry about it?

Thank you so much!

[Hal_Al]

You just do  not add this form to hers at all and don't worry about it.

The 1098-T is only an informational document. The numbers on it are not required to be entered onto your (or your student's) tax return. 

However receipt of a 1098-T frequently means you are either eligible for a tuition credit or possibly your student has taxable scholarship income. You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T.  You records indicate that neither is true. Just don't enter it. 

[KrisD15]

If you can prove the scholarship in Box 5 went to pay tuition, you needn't report the 1098-T however I would caution that you might need to look at prior years and make sure no education credit was taken for expenses that were covered by a scholarship that posted the following year. 

In other words, did you take a credit in 2023 for expenses that this 2024 scholarship paid? 

Even if that did happen, you might have had enough expenses in the prior year that the "refunded scholarship" does not matter. The American Opportunity Tax Credit maxes out with 4,000 expenses. 

@ShakespeareGeek 

[ShakespeareGeek]

Thanks for the reply. I guess I'm nervous either way about the discrepancy between box 1 and box 5 -- even if I leave it off my daughter's does that mean that the scholarship would end up treated as taxable income for me?  That would be just as bad 🙂

The 2023 version of our 1098-T does have that box 7 checked, "the amount in box 1 includes academic period starting Jan 2024."  And I see that there is a place in the software to basically override box 1 and manually enter what tuition was paid this year.  So can I do something like divide last years box 1 amount by 2 and add it here? That would certainly make the math work out.

I don't know how to prove what money went to what, since I'm not even really seeing it.  School says "Here's a scholarship" and then eventually gives me a bill for what I owe, I assume it goes first to tuition and then I'm paying whatever's left, which would include room and board. I suppose the school must have a breakdown somewhere, but do I need to get into all of that? This hasn't been a problem for the first three years she was there.

[Hal_Al]

No, there is no circumstance where the parent would report scholarship income on their return.  The 2024 1098-T does no go on the parent's tax return, because there is no tuition credit to claim in 2024. 

What are the numbers on the 2023 1098-T, boxes 1 & 5?

[ShakespeareGeek]

For 2023, box 1 is 71675 and box 5 is 40991. Box 8 (at least half time student) is checked, and Box 7 as noted.

For 2024, box 1 is 0 and box 5 is 24956. Box 8 is checked.