Should 1099-T Box 1 include BOTH the amount I paid plus the scholarship amount from Box 5?

[DBakerinPA]

My son attended college fulltime in 2021 and I withdrew the funds to pay for tuition and room/board from a 529 account.  The 1099-T I received from the school lists the dollar amount I actually paid them in Box 1 and his scholarship amount in Box 5.  So Box 1 matches the exact amount I withdrew from the 529 account and none of the distribution should be taxable. 

Turbo Tax seems to be reducing the amount in Box 1 by the scholarship amount when determining the amount I paid to the college making a portion of my 529 distribution taxable.   

The school filled out the 1099-T as Box 1 ($ I paid) + Box 5 (scholarship) = the total 2021 cost. 

TurboTax is assuming Box 1 (total 2021 cost) - Box 5 (scholarship) = $ I paid.

Do I need to ask the school for a corrected 1099-T or is there a way to handle in TurboTax so the scholarship is not deducted from the amount I paid?

[Hal_Al · Accepted solution]

Q. Should 1099-T Box 1 include BOTH the amount I paid plus the scholarship amount from Box 5?

A.  Yes.  But it's not unusual for the school to not match.

Q. Turbo Tax seems to be reducing the amount in Box 1 by the scholarship amount .

A.  Yes, that's how it would normally work. 

Q. Do I need to ask the school for a corrected 1099-T?

A. You don't need to, but it would be nice to have. But, based on previous posts, in this forum, probably hard to get.

Q. Is there a way to handle in TurboTax so the scholarship is not deducted from the amount I paid?

A.  Yes. Three ways: 1. Just change the 1098-T to match your records. 2. In the 1098-T screen, click on the link "What if this is not what I paid the school" underneath box 1. You will then be able to enter the actual amounts paid, including by the scholarship.  3. You will also reach a screen that allows you to adjust the scholarship amount for "amounts not awarded for 2021 expenses".

The 1098-T is only an informational document. The numbers on it are not required to be entered onto your 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. 

If you claim the tuition credit, you do need to report that you got one or that you qualify for an exception (the TurboTax interview will handle this)

You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T.