You can take advantage of the loophole @Hal_Al mentions if you meet a few criteria:
- Your scholarship does not specifically state that the scholarship must be used for your tuition.
- You had $12,000 worth of other expenses like room and board, books, supplies, and equipment on which you spent the $12,000.
If that is the case, you may still be eligible for an Education Credit if you follow these steps. However, depending on which Education Credit you qualify for, this may not help you and may even increase your taxes. Please use these steps rather than the ones previously mentioned which were for a prior year:
- In the Federal > Deductions & Credits section of your return, scroll down to Education and click Show more.
- Click Start/Revisit next to Expenses and Scholarships (1098-T).
- Enter your 1098-T. Under Your Education Expenses Summary, click Edit
- Click Edit next to Scholarships/Grants (for all schools)
- The first screen should be correct based on your 1098-T. Click Continue.
- Answer Did your Aid Include Amounts Not Awarded for 2021 Expenses?
- If you used your scholarship for anything besides your tuition, answer Yes and then put in how much of the $12,000 you spent on these other expenses.
You will not get an Education Credit unless you paid for tuition out-of-pocket, which means your scholarship would have to have been used on other expenses. If you enter $12,000 for the amount under the question Did you Pay for Room and Board with a Scholarship or Grant? it could have several impacts on your tax return and it may not benefit you personally. Also, please note that you can not do this if your scholarship specifically states that it is for tuition or if the scholarship is paid directly to the institution for tuition and you are just credited with the remainder.
@pm4040
