Education

The biggest refund might be to claim more income. This is a long answer and a long process. My daughter had the same refund issue, the numbers don't quite match. Here is why.

• The tuition number is what was paid to the college for you.
• The scholarships could have gone to you and then you gave it to the school. It doesn't matter.
• Then there were some other expenses for school that the college took out and then gave you the rest, $2021. Those other expenses could have been fees, tickets, anything.

The reality is your 1098T. That extra money was income to you, you just did not get it in your hands but it did go to pay your bills.

There are two ways to handle this income. Yes, I know this sounds backwards for method 2.

Method 1:  Only claim the difference between box 1 and box 5 as income.

Method 2: Claim more of box 5 as income, up to the full amount and claim the tuition part to get the education credits.

Depending on your other income, method 2 is probably going to give you the best bang for your buck. The education credit can be thousands of dollars refund versus a tax liability of a few hundred dollars at most. The only hard part is figuring how much to claim for education and  how much to put into income.

I would start with making all of box 5 as income. Then check that it was used for other expenses (rent, food, etc come into play here). The program will ask if you used your scholarship for room and board, mark yes.

Then state that you paid the tuition and claim the education credits.

This is absolutely legal and the IRS recommends moving the money to your best benefit.

Here are some related links:

Here are some links:

Form 8863

Qualified Expenses

Qualified College

Available Education Credits

IRS Q & A about education credits

Tax Benefits for Education: Information Center

About Form 8863, Education Credits