When you added your 1098-T info, your federal refund likely decreased because the scholarships and grants (Box 5) on the form exceeded your tuition payments (Box 1). This excess amount is considered taxable income, which increases your tax liability and reduces your refund
- You should report the 1098-T to claim education credits or deductions. Additionally, schools also submit the 1098-T to the IRS . Thus, reporting the information on your return helps to ensure that the information on your tax return matches IRS records, avoiding discrepancies
- This is not likely a bug in the software, as TurboTax is designed to calculate your eligibility for education credits and deductions based on what was entered from the 1098-T and adjusts your refund accordingly
For more details, you can check out TurboTax's guide on the 1098-T form and how it impacts your refund.
