1098-T

I'm wondering if someone can explain this to me.  Total tuition for 2020 is $64K.   Taxpayer paid $33K and received a scholarship for $31K.   The 1098-T shows the amount paid and the scholarship amount but doesn't account for the total tuition.  The tuition was paid with a 529 account and TurboTax is subtracting the scholarship from the $33K making it seem like total expenses are only $2K and says the difference between the 529 distribution and the $2K is taxable.  This doesn't make sense to me because the net out of pocket cost ($33K) far exceeds the distribution.  Can someone explain this to me and if there is a different way to treat it in the program?  I don't want to report a different amount than what is on the 1098.

ThomasM125
Expert Alumni

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When you enter your form 1098-T, you will see under the box 1 entry a sentence that says What if this in not what was paid to this school? When you click on that entry, you will be able to enter the full amount of the tuition paid, even though it is not listed on the 1098-T form.

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Thank you.  The amount in box 1 is the correct amount paid. However, the scholarship is being subtracted from that amount and shouldn’t because the total tuition was the box 1 amount plus the scholarship.  That’s what’s confusing me.  

AmyC
Expert Alumni

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Box 1 should be $64k and box 5 is $31k based on what you are saying. The 1099-Q is $33k and should be entered after the 1098-T or not entered at all. The 1099-Q can be used on room and board as well. You do not have to enter it since nothing is taxable. This leaves you at least $4,000 to use towards AOTC, if desired.

 

See my 529 information here.

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So, should the taxpayer request to have the 1098-T corrected or should I just enter the $64K into TurboTax even though the form has a different amount?

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Taxpayer?  Are you a tax preparer?  If so, TT is not licensed for your use.

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Thank you for your concern...TT allows you to prepare up to 5 tax returns.   Your reply was not constructive.