Hi - I am filing my son's taxes and found that Turbotax is taxing the scholarship amount in 1098-T box 5.
Here are some sample numbers
- Box 1 = $20k
- Box 5 = $5k
- 529 plan paid $20k to the school
The Student Information Worksheet section VIII line 4 shows the $5k as excess distributions and calculates line 8 earnings taxable to recipient which ends up on 1040 line 7a.
According to https://www.irs.gov/pub/irs-pdf/p970.pdf Scholarship is tax free.
Should I zero box 5 on the 1098-T to work around this problem?
thx!
