Q. I was sent a 1098-T for a scholarship. Don’t I need to include that?
A. Maybe. Scholarships that pay for qualified expenses (tuition, fees and course materials) are tax free and do not need to be reported. If your scholarship exceeds qualified expenses, the excess is taxable income.
Q. Could it be possible to be given that form and not qualify for the Lifetime Learning Credit?
A. Yes. All students get a 1098-T. The school doesn't know or care if you qualify for a tuition credit or whether any of your scholarship is taxable.
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.
You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T. But, entering the 1098-T helps TurboTax (TT) do the calculation.
If you do claim the tuition credit, you do need to report that you got a 1098-T or that you qualify for an exception (the TurboTax interview will handle this)
