Why did my 1098-t drastically decrease my federal refund and increase how much I owed to the state? I am a full time graduate student.

Forum|Forum|7 years ago
June 3, 2019
4 replies
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Vanessa11_2

Level 13

Did you have a scholarship amount in box 5? Was box 5 greater than box 1 or 2?

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agnelloe1234Author

Level 2

Yes, box 5 was $7500 while box 1 was $2000, but my federal refund went from $930 to $219 and I went from owing $10 to the state to owing $238. Is it normal for it to change that much just because of the box 5 amount?

macuser_22

Alumni - Champ

Yes. The difference ($5,500) is treated as wages and is added to the 1040 line 1 amount and taxed as ordinary income. The change in the Federal tax indicates that your tax rate is about 13%

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

Vanessa11_2

Level 13

When you entered the 1098T, since your box 5 was $5,500 more than box 1, this became taxable income subject to regular income tax.

You will now see this amount on line 1 of your 1040 form.

Yes, it can be normal for it to cause that much of a change. Depending on your age and situation, even if you did not have other income, this money would still be taxed with the Kiddie Tax

It could have also increased your taxable income in general, giving you taxable income that you may not have had before entering it.

If you want to see exactly what changed, you can preview your 1040 by clicking TaxTools>>Tools>>View Tax Summary>>Preview My 1040 and look at lines 1, 7, 10 and 11. Write these numbers down, then delete your 1098-T and look at the numbers again. This will tell you exactly what is changing your numbers.

Just be sure to re-enter the 1098-T as it does have to be reported since it is taxable income.

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