Q. I'm wondering if the university reported this incorrectly?
A. Could be. That does happen.
Q. It should not be included as part of tuition and related expenses. Knowing this, do I report it as gross income?
A. It kinda depends on do you "think' it's that way or do you "know" it's that way. It kinda sounds like they were trying to help you by reporting it that way.
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 you have taxable scholarship income. You claim the tuition credit, or report scholarship income, based on your own financial records, not the 1098-T.
In the 1098-T screen, click on the link "What if this is not what I paid the school" underneath box 1. You will then be able to enter the actual amounts paid.
Or if you find it easier, just change the numbers in boxes 1& 5 to what your records show. The 1098-T that you enter in TT is not sent to the IRS.
