Q. Should I report tuition cost if it was covered by financial aid?
A. Simple answer: No.
The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or possibly your student has taxable scholarship income.
But, Scholarships that pay for qualified expenses (tuition, fees and books ) are tax free, so they don't have to be reported. Tuition, fees and books paid by tax free scholarships are not eligible for a tuition credit, so they don't need to be reported.
But, "financial aid" usually includes loans, as well as scholarships and grants. The money from loans is treated the same as "out-of-pocket" money. Tuition, fees, books and other course materials, including a required computer, paid by loans is eligible for the education credits.
