DavidD66
Employee Tax Expert

Education

According to the IRS, certain conditions must be met for a scholarship or fellowship to be tax-free:

  • The student must be a degree candidate at an eligible educational institution

  • The scholarship or fellowship money is used for qualified expenses. This includes tuition and fees, books, and course- or degree-related costs (like supplies required for specific classes) but does not include other college-related costs such as room, board and travel.
  • The money does not represent wages for teaching or other work.

Box 1 of Form 1098-T reports "Payments received for qualified tuition and related expenses".  Box 5 reports Scholarships or grants.  I suggest you revisit the Education section, and make sure the Form 1098-T was entered correctly, and that the proper amount of scholarship money was applied towards payment of tuition and fees.

 

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