Trying to fill out 1098-T

[Nevaeh5184]

The question asked in Pell grants and scholarships is, do you want to allocate to room and board or other noneducational expenses? I got 10,296.00 in financial aid its split into 1,993.00 from a federal pell grant and 8,303.00 from my scholarship. my room and board cost 2,475.00 and 2,241.00 in total thats 4,716.00.  My tuition only cost 5,192.00 and the required registration fee is 388.00 what do i put in that box?

[Vanessa A]

If you used the remaining money after your tuition and registration and eligible education expenses to pay for room and board, then yes, you would enter the $2,475 and $2,241 into that box.

This does make your scholarship become taxable income as room and board are not eligible education expenses.  However, anything you used it for other than tuition and fees, and qualified education expenses would become taxable income. 

[Hal_Al]

If box 1 of your 1098-T is $5192 (or 5580 [5192 + 388 = 5580]) and box 5 is $10,296, you don't need to enter anything about room & board. TurboTax (TT) will automatically treat the difference as taxable income. 

Are you the student or the parent of a student-dependent? What are you trying to accomplish? 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 the parent is either eligible for a tuition credit or possibly the  student has taxable scholarship income. 

There is a tax loop hole available where the parent of students on scholarship can still claim a tuition credit. See below. 

If the taxable scholarship is the student's only income, he does not need to file a tax return for that amount ($4716) of income. 

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There is a tax “loop hole” available to claim an education credit, for the parents of students on scholarship. The student reports all his scholarship, up to the amount needed to claim the American Opportunity Credit (AOC), as income on his return. That way, the parents  (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this  if the conditions of the grant are that it be used to pay for qualified expenses.

Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.

Books and computers are also qualifying expenses for the AOC. So, extending the example, the student had another $1000 in expenses for those course materials, paid out of pocket. She would only need to report $5000 of taxable scholarship income, instead of $6000.

The IRS actually encourages use of this technique. From the form 1040 instructions: “You may be able to increase an education credit if the student chooses to include all or part of a Pell grant or certain other scholarships or fellowships in income. For more information, see Pub. 970, the instructions for Form 1040 and IRS.gov/EdCredit".  PUB 970 even has examples of how to do the “loop hole”.

[Nevaeh5184]

I’m the student I just got to the portion 1098 T form but I didn’t know what all to put in the boxes but on my 1098-T form box one said 13,837.40 and Box 5 is 20,325.00 I was trying to see if I get any credit back 

[Hal_Al]

Q.  I was trying to see if I get any credit back?

A. Unlikely, sine you scholataships (box 5)  greatly exceed you qualified expenses (box 1).  The difference is actually reportable income to you. 

Whether you qualify to use the 'loop hole" to claim the credit, depends on more info. How old are you? Are you a full time student? Can you be claimed as a dependent? How much other income do you have, from what sources.

There's a new urban myth among college students that says they can get a $1000 from the government just for filing a tax form. For most of them, they simply aren't eligible. A full time unmarried student, under age 24, even if you don't qualify as a dependent, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working. You cannot be supporting yourself on parental support, 529 plans or student loans & grants. It is usually best if the parent claims that credit. 

You cannot claim the (up to) $1000 refundable credit if you are, or can be, claimed as a dependent by someone else.

Reference: Line 7 instructions for form 8863.

https://www.irs.gov/instructions/i8863#en_US_2024_publink53002gd0e674