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Education
Q. Is the impact of reporting 1098-T as is (Box 1 $0; Box 5 $9k) that I don't qualify for one of the edu credits?
A. Yes. It was a mistake to pay the 2023 tuition in December 2022.
Q. Can I change my Box 5 to $0 since it technically applied to the Tuition that was paid (and effectively credited) in Dec 2022.?
A. Yes, for the reason stated. Better yet, just don't enter the 1098-T on either your or the student's tax return as you know it has no effect on either. You cannot claim the credit, on your return, and none of the scholarship is taxable to him.
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.
If you claim the tuition credit, you do need to report that you got one or that you qualify for an exception (the TurboTax interview will handle this)
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. You will also reach a screen that allows you to adjust the scholarship amount for "amounts not awarded for 2023 expenses".
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.
Q. "I went back and reran my 2022 TTax as a test adding this 9k - and it didn't change ANYTHING on that 2022 return (still got the edu credit and Fed/State tax obligation unchanged)."
A. You are allowed to claim tuition paid in 2022, for the first term of 2023, on your 2022 tax return.